Finance

Yale SOM finance professors Frank Fabozzi, Gary Gorton, and Will Goetzmann discuss what caused the financial crisis, what we have learned since then, likely impacts of the financial reform legislation, and proposals to address unresolved issues in the housing and securitization markets.

James Chanos, the founder and president of the hedge fund Kynikos Associates, is a noted short-seller. He was one of the early doubters of Enron and more recently questioned the sustainability of the housing boom. In these videos, Chanos discusses a series of issues critical to hedge funds and short-sellers. Chanos also presented a Leaders Forum lecture at Yale SOM on October 26, 2009.

Mary Houghton is the president and co-founder of the ShoreBank Corporation, the largest and oldest community development bank in the country. She talks with Qn about how banking can be a powerful for-profit social venture.

Misunderstanding of risk was a major factor in the subprime crisis and ensuing recession. Andrew Lo argues that one has to look at both logical and emotional parts of the brain to grasp how people respond to financial risk.

Iceland may have been a forerunner of 21st century financial trends. First it profited from increasing integration with the global financial system. Then ties to the world economy helped pull it into fiscal ruin. What can an island with less than .005% of the world’s population teach us about globalization?

Keith McCullough YC ’99, founder and CEO of Research Edge, left the hedge fund industry in 2007 to try something different. He is assembling a team of research analysts who will bring the day-to-day informational edge of a hedge fund not just to institutional or extremely wealthy clients but to retail investors as well. But is the idea of an open hedge fund an oxymoron?

Sovereign wealth funds have become a source of controversy. They have the size — several trillion dollars and growing — to swing or stabilize markets. Meanwhile, their sometimes secretive strategies have invited worries that they could be used as tools of government policy. Jeffrey E. Garten, former SOM dean and former undersecretary of commerce for international trade, talked to Ng Kok Song, the managing director and group chief investment officer at the Government of Singapore Investment Corporation, about how one of the world’s largest SWFs is run.

Catherine Labio, an associate professor of comparative literature and French at Yale, studies the relationship between economics, fiction, and art. She teaches a course called Fictions of Capital, which explores the depiction of money and the economy from the 17th century to the present.

By 2006, the subprime market had grown to 20% of the total U.S. mortgage market, and 75% of these loans were securitized and sold off to investors around the world, facilitating an influx of capital. With credit easily available, more people than ever before were able to buy homes — but then the market seized up.

From 2005 through the middle of 2007, one public company after another was bought out and went private. The size of the deals escalated — Hertz for $15 billion, HCA for $33 billion, Equity Office Properties for $39 billion, TXU Energy for $44 billion. Then the megadeals stopped. Andrew Metrick explains what happened.