Economy in crisis
Making sense of the financial situation
By Megan Baker
Last Updated:1:32 PM EST 10/14/08 Section: News
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"We hoped to provide academic and practical incites to the ongoing financial crisis," Selim Itler, Dean of the Bittner School of Business, said. "A lot of people are worried. Can I retire? What will happen to my portfolio?"
The panel, which consisted of both professors from the Bittner School and professionals in the finance field, broke down why the situation happened and what should be done in light of it.
Finance professor Meroune Lakehal-Ayat contributed the crisis to inadequate bank supervision, poor economic models and reckless lending.
"Lenders relaxed their standards in response to the housing boom and allowed for unrealistic borrowing," Lakehal-Ayat said. "The regulators should have said stop. It should not have been permitted as it was."
While the housing market and poor regulation of loans definitely caused problems for the economy, Fisher alumnus and current president of Hudson City Savings Bank Ronald Hermance commented that the government is also at fault.
"Don't just blame regulators. Blame also falls on Congress and lobbyists. All these people had a hand in making the regulators dismembered," Hermance said. "It's also more than just the price of housing, it's just an easy scapegoat."
Hermance and other panelists also stressed that the crisis is not only an American problem, but is becoming a global one.
"The wells have dried up internationally and they are waiting for us to make a move. This is why you saw a drop in international markets," Hermance said.
While it seems that things may be really bad, professor of finance Edward Stenardi reminded the audience that this is not the first time the U.S. has been in an economic crisis, citing the great depression, the crash of 1987 and post 9/11 as examples. He also warned people to be mindful when gathering information from the media.
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