Professor Steven Schwarcz testifies before House Financial Services Committee
Oct. 3, 2007 – Steven L. Schwarcz, the Stanley A. Star Professor of Law & Business, testified before the Committee on Financial Services of the U.S. House of Representatives on Oct. 2. Schwarcz addressed the issue of systemic risk as the committee began to explore the ability of the current financial regulatory structure to respond to threats to the financial system. The hearing started at 10 a.m.An expert in commercial law, bankruptcy, international finance, and capital markets, Schwarcz has called on the Federal Reserve to think more broadly in order to protect against the potential for a systemic collapse of domestic and global markets. In a Sept. 17 op ed published in The Baltimore Sun, he observed that “An economic shock, such as a market panic or institutional failure, could trigger a domino effect, causing the failure of a chain of markets or institutions that ultimately affects the real economy.” The problem of systemic risk, he argued, requires that monetary policy be supplemented by governmental solutions, possibly involving the creation of a “lender of last resort.”
Schwarcz is completing a year-long study of the problem of systemic risk. The results of his research are set forth in the forthcoming paper, "Systemic Risk". A leading practitioner before he entered academia, Schwarcz also helped to pioneer the field of asset securitization. His book, Structured Finance, a Guide to the Principles of Asset Securitization, is one of the most widely used texts in the field. He has been an adviser to the United Nations on international receivables financing and a member of the U.S. Secretary of State’s Advisory Committee on Private International Law. Schwarcz is also a founding member of the International Insolvency Institute and Founding Director of the Duke Global Capital Markets Center.
The House Committee on Financial Services is chaired by Rep. Barney Frank (D-Mass.) and oversees all components of the nation's housing and financial services sectors, including banking, insurance, real estate, public and assisted housing, and securities. It reviews the laws and programs relating to the Federal Reserve Bank, the Federal Deposit Insurance Corporation, and international development and finance agencies such as the World Bank and the International Monetary Fund, among other institutions.
To schedule an interview with Professor Schwarcz or to request a copy of his paper, “Systemic Risk,” please contact Frances Presma at (919) 613-7248 or presma@law.duke.edu.