Ha-Joon Chang Quotes

It is probably the case that some regulation of financing will make crises less likely, and I would say higher capital requirements are an almost fail-safe way to make banks safer. But there are a lot of other things that may not be doing that, and so we need to be careful about sort of, like, rushing to one conclusion or another.

Securitization was one of the most brilliant financial innovations of the 20th century. It freed up a lot of capital. If it had been done responsibly, it would have been a wondrous thing because nothing is more stable, there’s nothing safer, than the American mortgage market.... It worked for years. But then people realized they could scam it.

Fannie Mae may have conformed to the rules but the rules didn’t conform to reality. A major bank or financial institution could meet every single regulatory requirement yet still be at the risk of collapse.

We are optimistic with respect to thrifts .... I don't think that there is any cause for undue concern and I would reject any suggestion that we are in the midst of some sort of a major systemic problem with respect to any element of our financial services industry.

I think people have to be very careful with new ideas [in fiancé and economics]. What you need to worry about is when you have something that’s a really good idea, but you get too much of it too fast, like over-the-counter derivatives.

Compelling large banks to hold more capital reduces their risk of failure, but as the last financial crisis [the Meltdown of 2008] demonstrated, during a wide-spread panic, investors and lenders lose all faith in the values banks have assigned to their assets, and many mistrust the banks that claim to have enough capital.

Don't act like a bank unless you are a bank. That was a really big lesson learned from 2008.

The financial crisis was linked to the fact that banks had excessive leverage and too many risky assets. The solution is not to try to dictate to banks what they can do or not do, but to require them to strengthen their capital to absorb potential losses and hold less risky assets.

I believe strongly that we need a finance industry that is good for the economy, and I don't think anybody would argue that during the eight years leading up to the Great Recession, a lot of bets were made [and] risks taken that weren't good for the economy.

American business would be run better today if there was more alignment between CEOs' interest and the company. For example, would the financial crisis of 2008 have occurred if the CEO of Lehman and Morgan Stanley and Goldman and Citibank had to take a very small percentage of every mortgage-backed security... or every loan they made?

The Obama administration's plan is to have the Federal Reserve regulate banks that might pose a 'systemic risk' if they were to fail.

If we are really serious about preventing another crisis like the 2008 meltdown, we should simply ban complex financial instruments unless they can be unambiguously shown to benefit society in the long run.

As we try to make the financial system safer, we must inevitably confront the problem of moral hazard.

The thought for a long time was that banks needed to be too controlled, too regulated to be turned over to the Wild West of the Net. Then the credit meltdown hit, and we saw just how reckless these so-called safe and regulated institutions were.

It is impossible to understand the financial health of big financial institutions and their potential impact on the market. They don't even understand it themselves.

I don't want to drive the markets crazy. I don't want to create trouble, but rather order and rules and norms. We have to struggle against financial excesses, those who speculate with sovereign debt, those who develop financial products which have done so much harm.

The only reason investors haven't run screaming from an obviously corrupt financial marketplace is because the government has gone to such extraordinary lengths to sell the narrative that the problems of 2008 have been fixed.

The financial system is drifting back to business as usual a bit to quickly …. We are starting to see risky behavior of the sort that people were scared of after the crises

To be sure, booms and busts will come and go. But their severity can vary dramatically based on the policies in place to prevent them. With stronger regulations, neither the housing and derivatives bubbles nor the eventual crash would have been so bad.

Should we think about separating the investment banks from the commercial banks, a new Glass-Steagall? I would be really excited to see that. I think it would be great for the economy.

What we have to find is the right level of regulation of our financial system so that it has the incentive to invest in things, but at the same time, it is sufficiently regulated so it can't get in the kind of trouble that we have seen in the past and we have seen recently.

I don't want to create a too-big-to-fail player.

Large financial institutions in this country will always play a role that is essential to our economic growth. But they must only be permitted to grow and interconnect, throughout our economy, under careful oversight and with a mechanism for allowing those connections to be broken safely.

I have been working hard trying to implement Dodd-Frank reforms. We went through a terrible crisis in 2008. Many people lost their homes.

Separating out banks and investment banks right now under Glass-Steagall would have very big implications to the liquidity and the capital markets and banks being able to perform necessary lending.