Moral hazard plays a central role in almost every narrative of the recent financial crisis: government's implicit guarantees led to excessive risk-taking, and when the guarantees turned explicit, it exacerbated moral hazard going forward. The moral hazard narrative of crisis causes and effects...

A comprehensive approach to minimizing the long-term costs of financial crises must include efforts to train regulators to respond effectively to crisis dynamics when they arise. An important gap exists, however, in our current approach: a uniquely effective building block for developing...

Most analyses of the financial crisis of 2007-2008 assign a large causal role to inflated credit ratings. The ratings flaw most directly implicated in the crisis involved “second-level” mortgage securitizations: individual mortgages were pooled and securities sold against them, and some of...

Financial crises can wreak havoc on an economy, but they can also generate significant costs that are not directly captured by economic variables: psychic harms to those who lose their homes or jobs, and a deterioration in public faith in key societal institutions. Because of this, we should...

As the financial crisis of 2007-2008 recedes in our rear view mirror, how worried should we be about what lies beyond the bend? According to two highly influential but conflicting accounts of the crisis, we should be very worried. This review essay critiques these accounts, with special focus on...