Annual Policy Conference 2023
Annual Policy Conference 2023
Recent Turmoil in Banking Markets: Evidence, Causes, Regulatory Response, Lessons, and Future Needs
The George G. Kaufman Center for Financial Policy Studies was introduced to evaluate and contribute to the debate concerning current policy issues associated with the financial services industry. Thanks to a generous gift, the center was created to honor the role of Professor Kaufman in financial sector policy research over the past 50 years, and to continue his legacy by encouraging a critical review of public policy options going forward.
On Wednesday, November 29, 2023 the center held its annual conference, bringing together researchers, policy makers, and financial industry executives to review and discuss relevant policy issues affecting the financial services sector. The event featured keynote presentations by Sheila Bair, Former Chair of the Federal Deposit Insurance Corporation; and Loretta Mester, President and CEO of the Federal Reserve Bank of Cleveland. Both have been major contributors to the policy debates over the past three decades.
Research and policy presentations will cover three areas:
- Our lead session discussed issues associated with the recent turmoil in banking markets. What were the causes of the problems in the spring of 2023? How were they addressed? What is the current situation? What lessons were learned? What additional precautions need to be taken? The financial problems seen in recent months revitalize policy debates that have been ongoing for decades (e.g., the role of market discipline, TBTF, capital requirements, liquidity requirements, stress tests effectiveness).
- We discussed issues associated with the mortgage loan search process. There is typically an expected positive relationship between applicant credit quality and loan application acceptance. Are there exceptions? Why? What are the lessons for mortgage market policy?
- Topics emphasizing the research efforts of George Kaufman. During his career, George conducted research and generated special publications on issues associated with bank regulatory reform, the effectiveness of monetary policy, unanticipated consequences of regulatory policies, and the effectiveness of regulations imposed to achieve specific social goals in the financial services industry. Current work in these areas were discussed.
The research presented, while backed by rigorous analysis, was presented for a broader audience with an emphasis on the implications for public policy.
Agenda
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Date: Wednesday, November 29, 2023
Time: 9:15 a.m. - 4:30 p.m.
Location: Schreiber Center, 16 E. Pearson St., Wintrust Hall
8:30 a.m.
Registration Opens
9:15 a.m.
Conference Opening
- Conference Introduction
Michael Behnam, Dean, Quinlan School of Business, Loyola University Chicago - Keynote Address
Sheila Bair, Former Chair, Federal Deposit Insurance Corporation
10:05 a.m.
Networking Break
10:20 a.m.
Session 1: Recent Turmoil in Banking Markets
Moderator: Douglas Evanoff, Executive Director, Kaufman Center for Financial Policy Studies, Loyola University Chicago
- Gregor Matvos, Northwestern University
- Charles W. Calomiris, Columbia University
- Carl R. Tannenbaum, Northern Trust
- Edward Prescott, Federal Reserve Bank of Cleveland
Noon
Luncheon
12:45 p.m.
Luncheon Presentation
Loretta Mester, President and CEO, Federal Reserve Bank of Cleveland
1:30 p.m.
Session 2: Accessing Credit
Moderator & Discussant: Lamont Black, DePaul University
- Loan Product Steering in Mortgage Markets
Sumit Agarwal, National University of Singapore
Gene Amromin, Federal Reserve Bank of Chicago
Itzhak Ben-David, Ohio State University - Searching for Approval
Sumit Agarwal, National University of Singapore
John Grigsby, University of Chicago
Ali Hortacsu, University of Chicago
Gregor Matvos, Northwestern University
Amit Seru, Stanford University
Vincent Yao, Georgia State University - Bank Branch Access: Evidence from Geolocation Data
Jung Sakong, Federal Reserve Bank of Chicago
Alexander K. Zentefis, Yale School of Management
2:55 p.m.
Networking Break
3:05 p.m.
Session 3: Financial Markets Policy Research: Honoring the Research of George G. Kaufman
Moderator & Discussant: Robert DeYoung, University of Kansas
- The Fed and its Shadow: A Historical View
Charles M. Kahn, University of Illinois
Stephen Quinn, Texas Christian University
William Roberds, Federal Reserve Bank of Atlanta - Credit for Me But Not for Thee: The Effects of the Illinois Rate Cap
J. Brandon Bolen, Mississippi College
Gregory Elliehausen, Board of Governors of the Federal Reserve System
Thomas W. Miller, Mississippi State University - Public Sector Banks—A ‘Secret Sauce’?: Understanding the Success of the State Bank of North Dakota
Robert S. Chirinko, University of Illinois at Chicago
4:30 p.m.
Adjourn
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The George G. Kaufman Center for Financial Policy Studies has become a vital asset to Loyola University Chicago’s Business School. Through conferences like this one, the Center brings together national experts to critically examine public policy options and engages industry professionals to support students exploring careers in the financial sector. This ongoing work honors Professor Kaufman’s legacy and commitment to rigorous financial policy research.
At this year’s conference, participants revisited one of Kaufman’s core themes: the unique regulatory treatment of the financial services industry. While most sectors benefit from a hands-off, market-driven approach, banking operates under a very different framework due to its central role in facilitating economic growth. Financial institutions are subject to operational constraints, safety nets, and oversight in response to systemic risks and externalities—such as contagion effects—where the failure of one institution can destabilize others.
Discussions also revisited the inherent tradeoffs of regulation. For example, deposit insurance, while necessary, reduces market discipline and can dampen banks' incentives to manage risk effectively. These issues were brought into sharp focus by the Spring 2023 failures of Silicon Valley Bank, Signature Bank, Silvergate Capital, and First Republic Bank. The regulatory response—including expanded liquidity facilities and safety nets—sparked renewed debate about how to best ensure long-term financial stability.
Beyond banking, the conference addressed broader questions of market regulation, including the unintended consequences that often accompany well-meaning policies. Mortgage markets were a focal point, as were research areas long associated with Professor Kaufman: bank regulatory reform, monetary policy effectiveness, and the impact of financial regulations aimed at achieving social objectives.
Keynote speakers included Sheila Bair, former Chair of the FDIC, and Loretta Mester, President and CEO of the Federal Reserve Bank of Cleveland, both of whom brought deep insights into the current regulatory environment and the path forward.
Recent Turmoil in Banking Markets: Evidence, Causes, Regulatory Response, Lessons, and Future Needs
The George G. Kaufman Center for Financial Policy Studies was introduced to evaluate and contribute to the debate concerning current policy issues associated with the financial services industry. Thanks to a generous gift, the center was created to honor the role of Professor Kaufman in financial sector policy research over the past 50 years, and to continue his legacy by encouraging a critical review of public policy options going forward.
On Wednesday, November 29, 2023 the center held its annual conference, bringing together researchers, policy makers, and financial industry executives to review and discuss relevant policy issues affecting the financial services sector. The event featured keynote presentations by Sheila Bair, Former Chair of the Federal Deposit Insurance Corporation; and Loretta Mester, President and CEO of the Federal Reserve Bank of Cleveland. Both have been major contributors to the policy debates over the past three decades.
Research and policy presentations will cover three areas:
- Our lead session discussed issues associated with the recent turmoil in banking markets. What were the causes of the problems in the spring of 2023? How were they addressed? What is the current situation? What lessons were learned? What additional precautions need to be taken? The financial problems seen in recent months revitalize policy debates that have been ongoing for decades (e.g., the role of market discipline, TBTF, capital requirements, liquidity requirements, stress tests effectiveness).
- We discussed issues associated with the mortgage loan search process. There is typically an expected positive relationship between applicant credit quality and loan application acceptance. Are there exceptions? Why? What are the lessons for mortgage market policy?
- Topics emphasizing the research efforts of George Kaufman. During his career, George conducted research and generated special publications on issues associated with bank regulatory reform, the effectiveness of monetary policy, unanticipated consequences of regulatory policies, and the effectiveness of regulations imposed to achieve specific social goals in the financial services industry. Current work in these areas were discussed.
The research presented, while backed by rigorous analysis, was presented for a broader audience with an emphasis on the implications for public policy.