Finance

Why Banks Remain Too Big to Fail

Told big bank failure would trigger a flood of bankruptcies and economic calamity, U.S. taxpayers collectively paid billions of dollars to bail out large institutions from the 2008 financial crisis. Despite passing Dodd-Frank legislation to mitigate a future bailout, Congress is on the verge of amending the U.S. bankruptcy code to make bankruptcy feasible for larger banks — more so than when Lehman Brothers’s 2008 bankruptcy filing ignited widespread panic. Smith School professor Clifford Rossi explains why things don't seem to be getting better. Read more...

Brexit Countdown: Faculty Perspectives

“Divorces are tough,” says Smith School economist Peter Morici. But Britain nonetheless should break from the “shackles” of its union to a Europe economy locked in ruinous cycles of debt crises and high unemployment. "The EU suffers from chronic slow growth thanks to a smothering bureaucracy and single currency," Morici says. Other Smith School professors foresee challenges if United Kingdom voters opt to separate from the European Union in a referendum on June 23, 2016. Read more...

‘Sharks’ Losing Ground to ‘Prey’ in Markets

Since the global financial crisis, “active” fund managers — stock pickers looking to beat the market — have lost ground to their “passive“ counterparts, as investors shun stock pickers amid concerns over bad performance and high fees. Smith School finance professor Russell Wermers compares the situation to the shark-prey relationship. "We need both in the water to make the world go round properly," he says. Read more...

Making Sense of Berkshire’s Bite of Apple

Berkshire Hathaway’s small but much-discussed bite of Apple suggests a vote of confidence for a tech giant that had been sliding in the stock market. It also hints at how Warren Buffett’s holding company will do business after the 85-year-old "Oracle of Omaha" no longer is there, Smith School professor David Kass says. Revealed Monday in a regulatory filing, the roughly $1 billion investment of 9.8 million shares represents about 1 percent of Berkshire’s $129 billion portfolio value. Read more...

Scholars and Industry Leaders Honor Albert 'Pete' Kyle

Leading academics, bankers and regulators gathered at the Smith School for a conference honoring the Smith School’s Albert “Pete” Kyle — specifically, the thirtieth anniversary of the publication of Kyle’s seminal 1985 paper “Continuous Auctions and Insider Trading.” Co-sponsored by the Smith School’s Center for Financial Policy and UBS, the conference included discussion of the paper’s influence, tributes to Kyle and scholarly talks. Read more ...

Treasury Targets Corporate Inversions, Drawing Ire of CEOs

Treasury continues to tighten its rules to prevent corporate "inversions" — the move in which a U.S. company merges with a smaller foreign company then shifts its official location abroad, to avoid U.S. taxes. Given the lack of congressional action on this issue, the new rule appears "reasonable," says the Smith School's Michael Faulkender. Still, he says, the U.S. tax system is "broken." Read more ...

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