"I believe that banking institutions are more dangerous to our liberties than standing armies.”
—Thomas Jefferson
Laurence Booth uses the provocative quote to begin a chapter in a newly published book — “The Financial Crisis and Rescue: What Went Wrong? Why? What Lessons Can Be Learned?” — that presents perspectives on the credit meltdown.
The University of Toronto's Rotman School of Management assembled a group of 10 academics and two other intellectual thinkers associated with the institution — including Keith P. Ambachtsheer, adjunct professor of finance and director of the Rotman's International Centre for Pension Management, and president of KPA Advisory Services Ltd. — to each contribute a chapter to the book in response to current events.
Mr. Booth, CIT chair in structured finance and professor of finance, analyzes in a chapter called “Structured Finance: subprime, market meltdown and learning from the past,” the entangled roles of financial engineering and loose banking standards.
While the crisis is still playing out, and the actions taken to rescue the financial markets and economy are still unfolding, the book provides an analysis of issues from the roots of the crisis to the rescue plan of Treasury Secretary Henry M. Paulson Jr., through to setting a framework for reducing the chances of a recurring meltdown.
The 166-page book, published by the University of Toronto Press, methodically marches through key issues in the crisis and its proposed structure for recovery, including behavioral finance, integrative thinking in financial analysis, risk management, corporate governance, leadership and public policy.
Mr. Ambachtsheer, in his chapter, examines the role and design of the worldwide pension system, which with $30 trillion in assets is a major player in the global financial markets.
Michael Hlinka, an instructor at the University of Toronto's School of Continuing Studies and a business commentator with the CBC, concludes the book with a renewed faith in markets.
“The soundest economically oriented public policy provides everyone with the widest possible latitude to negotiate freely their own arrangements,” he wrote, adding, “printing money or running deficits doesn't generate wealth.”
The book, in a succinct and clear analysis, points the way toward the correct course for righting the financial markets.