LAW & ECONOMICS COLLOQUIUM
presents
Kathryn Judge
Columbia Law School
Guarantor of Last Resort
Tuesday, October 2, 2018
4:10 - 5:45
Room FL219 (John Willis Classroom)
78 Queen's Park
The optimal response to a financial crisis entails addressing two, often conflicting, demands: stopping the panic and starting the clock. When short-term depositors flee, banks can be forced to sell assets at fire-sale prices, causing credit to contract and real economic activity to decline. To reduce these adverse spillover effects, governments routinely intervene to stop systemic runs. All too often, however, they deploy stopgap measures that allow the underlying problems to fester. To promote long-term economic health, policymakers must also ferret out the underlying problems and allocate the losses that cannot be avoided. An appropriately designed guarantor of last resort can address these conflicting demands. Just-in-time guarantees keep private capital in the system, providing policymakers the time that they need to develop a viable plan to address deficiencies. A strict time limit on those guarantees ensures that policymakers and market participants remain motivated to devise such a plan, avoiding the alternative pitfall of excessive forbearance.
Kathryn Judge is a Professor of Law at Columbia Law School. Judge is an editor of the Journal of Financial Regulation and serves on the Financial Research Advisory Council of the Office of Financial Research. She is an expert on financial markets and regulation, including banking, the 2008 financial crisis, regulatory architecture, central bank governance, and regulatory accountability. She has had two articles selected by peers as among the top business law articles of the year and her scholarship has been published in numerous leading journals, including the Stanford Law Review, Harvard Law Review, The University of Chicago Law Review, Virginia Law Review, and Columbia Law Review. Prior to joining the Law School, Judge clerked for Judge Richard Posner of the 7th Circuit Court of Appeals and Justice Stephen Breyer of the Supreme Court. She also worked as a corporate associate with Latham & Watkins. She is a graduate of Stanford Law School, where she earned the Urban A. Sontheimer Honor (second in class), and Wesleyan University.
For more workshop information, please send an email to events.law@utoronto.ca
