Debate "Housekeeping" (07:05)
Foreign Affairs Magazine has partnered with Intelligence Squared to produce this debate. John Donvan introduces the panelists and explains the format for the debate on improvements since the global financial crisis.
Opening Statements For: Neel Kashkari (06:21)
President of the Federal Reserve Bank of Minneapolis, Kashkari describes how the system is safer because increased bank capital, longer terms implemented, less mortgage-backed securities trading. and improved quantitative easing.
Opening Statements Against: Robert Rosenkranz (06:14)
Chairman of Delphi Capital Management and the Intelligence Squared U.S. Foundation, Rosenkranz explains that the largest vulnerability is the failure of a single bank. Ten trillion dollars of derivatives are now outstanding. Algorithmic trading tends to go in the same direction at the same time.
Opening Statements For: Jason Furman (06:17)
Former chairman of the council of economic advisors under President Obama, Furman describes how derivatives are more standardized and transparent than ten years ago. Europe regulates its banks now and created the European Stability Mechanism. The United States has more debt than it used to.
Opening Statements Against: Kenneth Rogoff (06:21)
Economist and professor at Harvard University, Rogoff describes how Bush created a $450 billion-dollar stimulus package. Huge changes need to be made during a financial crisis. Tools are limited in fiscal and monetary policies.
Financial System Outside of Banks (12:48)
Donvan summarizes opening statements. Kashkari argues that derivatives now go through a clearinghouse. Rosenkranz rebuts that no one can predict what will cause the next financial crisis. Banks are still central to the financial system.
International Partnerships (05:57)
Kashkari explains how the Dow Industrial Average dropped 777 points when the House of Representatives voted down TARP. Rosenkranz rebuts that the risks are migrating away from banks. Lenders do not have the same amount of protection than a decade ago.
QA: Impact of Quadrupled Interest Rates (03:25)
Ken Rogoff explains that everything would blow up, but the likelihood of it happening is unlikely. With the move toward deregulation and individuals not enforcing the standards, problems occur.
QA: Can the System Effectively Deal with a Crisis (01:23)
Furman explains how there are better tools in place than a decade ago. Massive fiscal stimulus packages could help ameliorate the damage.
QA: Derivatives and Clearinghouses (05:58)
Kashkari's agrees that Rogoff's point about cyber risks is valid, but the country is better off incorporating clearinghouses with increased transparency than it was a decade ago. The U.S. Intelligence community worries about cyberwar with Russia, North Korea, Iran and/or China striking financial institutions. Rogoff explains how issues with rating's agencies have not been addressed.
QA: Outstanding Student Debts (05:33)
Furman explains how student debt is guaranteed by the government so it will not cause a global crisis. Kashkari discusses how political dysfunction is the norm in this country, but our citizens will put their differences aside; Rosenkranz rebuts that Congress does not want to bail out financial institutions. Experts discuss the effects of the growing populist movement across the world.
Concluding Statement For: Furman (02:35)
The side for the resolution explains five areas of concern, three of which are safer than a decade ago. Furman explains how Ben Bernanke and Christina Romer learned from the Great Recession and put measures in place to ensure it will not happen again.
Concluding Statement Against: Rosenkranz (01:51)
The world has evolved in ways that are more dangerous for financial institutions. Rosenkranz cites examples including autopilot, algorithmic trading, ETFs, index funds, and the role of China in the global system.
Concluding Statement For: Kashkari (01:51)
Kashkari describes how he slept in his office during the last financial crisis. The system is stronger than it was a decade ago.
Concluding Statement Against: Rogoff (02:13)
Rogoff describes why the system is not safer because of internationalized problems and it is growing inexorably larger. Banks should make more of a personal investment into an endeavor.
Time to Vote (02:16)
Donvan compliments panelists on their conduct and instructs the audience to vote. Kashkari wants to see evidence that U.S. economy is thriving before imposing rate hikes.
Audience Vote Results (01:02)
Pre-Debate - For: 29% - Against: 49% - Undecided: 22%
Post-Debate - For: 35% - Against: 57% - Undecided: 8%
Credits: Ten Years After the Global Financial Crisis, the System is Safer: A Debate (00:09)
Credits: Ten Years After the Global Financial Crisis, the System is Safer: A Debate
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