Jointly organized by the
Federal Reserve Bank of Cleveland and the
FDIC’s Center for Financial Research

The Federal Reserve Bank of Cleveland and the FDIC’s Center for Financial Research invite submissions for a conference on the topic of identifying and resolving financial crises, to be held April 17–18, 2008, in Cleveland. The organizers are particularly interested in papers related to:

• Distinguishing between individual problems and systemic crises
• Theory and evidence on the resolution of financial firms
• Identifying policies that lead to contagion or correlated risk
• Contingency planning for crises.

Papers dealing with other topics concerning financial system stability are also welcome.

The organizers plan to produce a small (8–10 papers) program designed to provide substantial opportunities for debate and exchange of views among informed participants, drawn from academia, regulatory agencies, and practitioners.

Financial crises remain a recurring problem despite, or even because of, extensive innovation in capital markets over the past several decades. Preparing for the next, unknown, crisis requires a deeper understanding of when financial problems rise to the level of systemic concern. We must also enhance the tools available to resolve specific issues. An understanding of alternative policies, including what has and hasn’t worked in the past, can enhance commitment and contingency planning. Furthermore, current or prospective policies must also be examined for moral hazard, time inconsistency, or other factors that exacerbate future crises.

As in the case of a life-threatening illness, the response to the financial crisis needs to be immediate and effective. Crisis interventions are fraught with trade-offs—what are the costs of doing nothing? What is the probability that markets will seize up? Are there viable alternatives? Will the intervention make further crises more likely? Accordingly, the time for discussions regarding the response to financial instability is during times of relative calm to ensure the comprehensive consideration of all factors that may influence response.

Papers will be selected for presentation based on reviews collected by the Conference Organizing Committee: Joseph Haubrich and James Thomson (Federal Reserve Bank of Cleveland ), Paul Kupiec (FDIC Center for Financial Research), and Mark Flannery (FDIC Center for Financial Research and University of Florida ). Expenses for travel, food, and lodging will be reimbursed for paper presenters.

For additional information, contact Joseph Haubrich (216) 579-2802 (jhaubrich@clev.frb.org) or Mark Flannery (352) 392-3184 (Flannery@ufl.edu).