Getting Off Track

How Government Caused, Prolonged, and Worsened the

Financial Crisis and the Implications for Regulatory Reform

WHAT CAUSED THE FINANCIAL CRISIS? What prolonged it? What worsened it dramatically more than a year after it began? In the view of Hoover Institution Senior Fellow and Stanford economist John B. Taylor, the blame falls squarely at the feet of government.

Professor Taylor’s contrarian perspective crisis holds that the primary cause of the financial crisis was a botched monetary policy by the Federal Reserve under Alan Greenspan, along with government efforts, such as promoting home ownership among the poor. For Taylor the government is more part of the problem than part of the solution.

“They caused it by deviating from historical precedents and principles for setting interest rates that had worked well for twenty years,” Taylor writes in his new book Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis. “They prolonged it by misdiagnosing the problems in the bank credit markets and thereby responding inappropriately, focusing on liquidity rather than risk. They made it worse by supporting certain financial institutions and their creditors but not others in an ad hoc way, without a clear and understandable framework.”

Professor Taylor expands on the themes in his book -- which is a combination of empirical reseach and essays --  in a  Webinar that was originally broadcast live on May 20. David S. Evans, an economist who is the editor-in-chief of FinReg21’s Lombard Street, moderates.  

If the link does not immediately take you to the Webinar registration, please scroll down the page, where you can also check out upcoming events and previously broacast  “On Demand” Webinars from FinReg21’s Pundit Pit on Channel 21.

Excerpts from Getting off Track will be published in the upcoming May 27 issue of Lombard Street, FinReg21's flagship ejournal about financial services regulation and reform.

To purchase a copy of the book, contact Hoover Press.

Presenter bios

John B. Taylor is the Bowen H. and Janice Arthur McCoy Senior Fellow at the Hoover Institution and the Mary and Robert Raymond Professor of Economics at Stanford University. He served on the President’s Council of Economic Advisors from 1989 to 1991 and as Under Secretary of the Treasury for International Affairs from 2001 to 2005. He is a member of the California Governor's Council of Economic Advisors.
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David S. Evans is the Executive Director of the Jevons Institute for Competition Law and Economics at the University College London, where he is also a visiting professor, and a lecturer at the University of Chicago Law School. He is the Founder of Market Platform Dynamics and is the editor-in-chief of Lombard Street.