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New Directions in Financial Services Regulation$
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Roger B. Porter, Robert R. Glauber, and Thomas J. Healey

Print publication date: 2011

Print ISBN-13: 9780262015615

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262015615.001.0001

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Keynote Address by Paul A. Volcker: The Financial Crisis in Perspective

Keynote Address by Paul A. Volcker: The Financial Crisis in Perspective

(p.201) Keynote Address by Paul A. Volcker: The Financial Crisis in Perspective
New Directions in Financial Services Regulation

Roger B. Porter

Robert R. Glauber

Thomas J. Healey

The MIT Press

This chapter presents a keynote address at a conference to honor David Dodge, the former Governor of the Bank of Canada. This keynote address examines the financial crisis and sees it as part of a larger problem, particularly a structural problem in the economy. It discusses the past decade’s prosperous economy as well as the housing boom. The address gives a shorthand description of what went wrong in the financial world, what imbalances were present in the current economy, and how these imbalances initiated the crisis. The problem of moral hazard is noted, where the question is, if government action rescued the market once, will it do so again? Thus the concern is that moral hazard will only contribute in the creation of yet another crisis down the road. More importantly, it raises questions for future economic growth, and how this can be achieved.

Keywords:   financial crisis, David Dodge, housing boom, moral hazard, future economic growth, structural problem

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