Overview

This comprehensive historical account tells the story of 200 years of financial panics in America, from 1819 through to the economic hardship of 2020, showing how and why so many financial crises have occurred in the United States and offering solutions to avoiding these sorts of crises moving forward. In 200 Years of American Financial Panics, Thomas P. Vartanian examines the myriad factors that contributed to financial crises throughout American history: the imposition of tariffs and the creation of dozens of poorly regulated, uncapitalized state banks facilitated the collapse of 1819; government battling over whether gold, silver or paper money should be the preeminent method of exchange created the perfect conditions for the depression of 1893; in the 1920s, the Federal Reserve kept interest rates low to assist the central banks in England and France, allowing an overheated stock market in the United States to shift into overdrive and crash in 1929; the roots of the S&L crisis in the late ‘80s can be found in 1966, when Congress and the states imposed artificial caps on deposit and mortgage interest rates to encourage greater home ownership; in the 1990’s, the government pressured banks to offer mortgages to low and middle-income borrowers while the Fed engaged in loose monetary policies – leading to the greatest economic crisis since the Depression. This book dissects financial crises in a way not attempted before, showing that the pyramid of governmental financial oversight deployed to foster economic safety has been turned on its head in our current era, making our system of financial oversight less effective and more susceptible to financial crises. Uniquely, Vartanian also explains how the technology explosion, from artificial intelligence to cryptocurrencies, is impacting capital investment, liquidity and business psychology, making it even more critical that the formula for financial oversight in the country be renovated. In a fair-minded and nonpartisan way, Vartanian, the Executive Director of the Program on Financial Regulation & Technology at George Mason University’s Antonin Scalia Law School, presents extensive evidence of how some forms of government intervention - certainly not all - threaten market equilibrium.

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9781633886704

Table of Contents

Reviews

200 Years of American Financial Panics is a fascinating, well-informed critique by someone who has seen financial regulation in the USA from every angle. Vartanian convincingly demonstrates that the faults lie not solely with greedy bankers, but with a whole range of executive and political decisions. Above all, he rightly focuses on the impact of technology, such as the use of Big Data, AI, and quantum computing, all of which should be harnessed to facilitate a financial sector which not only benefits its citizens but protects them as well. This is a timely and thoroughly researched call to action . -Dr Oonagh McDonald CBE, former UK Member of Parliament and former Board Member of the UK Financial Services Authority 200 Years of American Financial Panics is an incredibly readable and understandable analysis of financial regulation and its relationship to American financial crises. It learns from the past to point a smarter way forward for financial regulation -Greg Baer, President and CEO of Bank Policy Institute, former Managing Director and Head of Regulatory Policy at JPMorgan Chase, and former Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury In 200 Years of American Financial Panics, Vartanian uses his years as a preeminent federal banking regulator to give us a riveting and detailed account of the crashes, recessions and depressions that have rocked our country's fragile financial ecosystem, and why if nothing changes we should expect more. In an account both lively and analytically sharp, we see a financial sector that could be made more resilient through a real-time system of technology driven oversight. A gripping read for those many Americans wondering why they have experienced the pain of two deep economic crises in but one lifetime. -Sarah Bloom Raskin, Former Deputy Secretary of the Treasury and Former Governor of the Federal Reserve Board Vartanian brings it all together: historical perspective, fascinating personal experience from the center of events, and sensible proposals for improvement of regulation. Citizens and decision makers have the guide they need right here. -J. Christopher Flowers, CEO of J.C. Flowers & Co. 200 Years of American Financial Panics is a definitive history of financial crises in America and how government oversight prevents and creates them. Vartanian uses his experienced legal and business eye to unravel the conventional wisdom and identify the enormous positive and negative impacts that technology will likely have on the U.S. economy in the future. -William M. Isaac, Co-Chairman of the Isaac-Milstein Group, former Chairman of the FDIC and Fifth Third Bancorp, and the author of Senseless Panic: How Washington Failed America

Vartanian uses his unparalleled experience as a regulator, lawyer, educator and technology futurist to decipher the past, explain the present and predict our financial future. He provides critical insight on the role technology can play in identifying and averting potential future financial panics. -Craig Phillips, Former Counselor to the Secretary, U.S. Department of the Treasury 200 Years of American Financial Panics is a fascinating, well-informed critique by someone who has seen financial regulation in the USA from every angle. Vartanian convincingly demonstrates that the faults lie not solely with greedy bankers, but with a whole range of executive and political decisions. Above all, he rightly focuses on the impact of technology, such as the use of Big Data, AI, and quantum computing, all of which should be harnessed to facilitate a financial sector which not only benefits its citizens but protects them as well. This is a timely and thoroughly researched call to action . -Dr Oonagh McDonald CBE, former UK Member of Parliament and former Board Member of the UK Financial Services Authority 200 Years of American Financial Panics is an incredibly readable and understandable analysis of financial regulation and its relationship to American financial crises. It learns from the past to point a smarter way forward for financial regulation -Greg Baer, President and CEO of Bank Policy Institute, former Managing Director and Head of Regulatory Policy at JPMorgan Chase, and former Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury In 200 Years of American Financial Panics, Vartanian uses his years as a preeminent federal banking regulator to give us a riveting and detailed account of the crashes, recessions and depressions that have rocked our country's fragile financial ecosystem, and why if nothing changes we should expect more. In an account both lively and analytically sharp, we see a financial sector that could be made more resilient through a real-time system of technology driven oversight. A gripping read for those many Americans wondering why they have experienced the pain of two deep economic crises in but one lifetime. -Sarah Bloom Raskin, Former Deputy Secretary of the Treasury and Former Governor of the Federal Reserve Board Vartanian brings it all together: historical perspective, fascinating personal experience from the center of events, and sensible proposals for improvement of regulation. Citizens and decision makers have the guide they need right here. -J. Christopher Flowers, CEO of J.C. Flowers & Co. 200 Years of American Financial Panics is a definitive history of financial crises in America and how government oversight prevents and creates them. Vartanian uses his experienced legal and business eye to unravel the conventional wisdom and identify the enormous positive and negative impacts that technology will likely have on the U.S. economy in the future. -William M. Isaac, Co-Chairman of the Isaac-Milstein Group, former Chairman of the FDIC and Fifth Third Bancorp, and the author of Senseless Panic: How Washington Failed America

"""Drawing upon his years in government and private practice in the financial industry, Vartanian has developed an intimate, real world knowledge of financial crises from multiple perspectives. In 200 Years of American Financial Panics, he presents us with an important and timely review of common elements that underlie these disruptive events. More importantly he provides a view into future threats for financial dislocation coming from crypto currencies, A.I. and cyber events. Chief among the themes throughout the book is the role of government in its attempt to resolve these crises, implementing controls that provide for unintended consequences that form the basis of future crises."" -John Buran, CEO Flushing Financial Corp. and Chairman of the Board, Federal Home Loan Bank of NY ""In 200 Years of American Financial Panics, Vartanian revisits U.S. financial history in a clear, concise, and compelling way. He offers a great reminder of the unintended consequences that so often arise from regulatory interventions made to address a few bad actors and inadequate controls. Best of all, he shares enlightened ideas for improving regulatory oversight which is a cause for optimism for those who believe free markets best serve consumers in our society. This book is a must-read for anyone interested in learning how our financial system operates."" - Steve McManus, General Counsel, State Farm Insurance ""Vartanian brings it all together: historical perspective, fascinating personal experience from the center of events, and sensible proposals for improvement of regulation. Citizens and decision makers have the guide they need right here."" -J. Christopher Flowers, CEO of J.C. Flowers & Co. ""Vartanian uses his unparalleled experience as a regulator, lawyer, educator and technology futurist to decipher the past, explain the present and predict our financial future. He provides critical insight on the role technology can play in identifying and averting potential future financial panics."" -Craig Phillips, Former Counselor to the Secretary, U.S. Department of the Treasury ""200 Years of American Financial Panics is a definitive history of financial crises in America and how government oversight prevents and creates them. Vartanian uses his experienced legal and business eye to unravel the conventional wisdom and identify the enormous positive and negative impacts that technology will likely have on the U.S. economy in the future."" -William M. Isaac, Co-Chairman of the Isaac-Milstein Group, former Chairman of the FDIC and Fifth Third Bancorp, and the author of Senseless Panic: How Washington Failed America ""200 Years of American Financial Panics is a fascinating, well-informed critique by someone who has seen financial regulation in the USA from every angle. Vartanian convincingly demonstrates that the faults lie not solely with greedy bankers, but with a whole range of executive and political decisions. Above all, he rightly focuses on the impact of technology, such as the use of Big Data, AI, and quantum computing, all of which should be harnessed to facilitate a financial sector which not only benefits its citizens but protects them as well. This is a timely and thoroughly researched call to action"". -Dr Oonagh McDonald CBE, former UK Member of Parliament and former Board Member of the UK Financial Services Authority ""200 Years of American Financial Panics is a superb, thought-providing tour through U.S. financial history by one of the nation's foremost financial regulatory experts. Along the way, Vartanian shares the lessons learned during his more than four decades as a practicing lawyer and as a former financial regulator during some of the most tumultuous times in U.S. history. Easily accessible to general readers, Vartanian's account also will engage experienced practitioners and policymakers with its erudition and valuable insights on how the U.S. can avoid future financial crises."" -Andrew Olmem, partner at Mayer Brown LLP, former Deputy Director of the White House National Economic Council, and former Republican Chief Counsel at the U.S. Senate Committee on Banking, Housing, and Urban Affairs ""200 Years of American Financial Panics is an incredibly readable and understandable analysis of financial regulation and its relationship to American financial crises. It learns from the past to point a smarter way forward for financial regulation"" -Greg Baer, President and CEO of Bank Policy Institute, former Managing Director and Head of Regulatory Policy at JPMorgan Chase, and former Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury ""200 Years of American Financial Panics is the antidote for Twitter-sized explanations for the complexities, and causes, of the financial crises experienced by the US during the last 200 years. Vartanian's muscular, insightful, and compelling prose is a cross between Norman Mailer and Milton Friedman. Any reader with a passing interest in the financial history of the US will find it easily accessible. As a former bank regulator, attorney and current banker and banking law professor, I strongly recommend this work, especially to those with an interest in the period leading up to and during the S&L crisis."" -Richard Wald, Chairman and CEO of Emigrant Mortgage Company and Emigrant Funding Corp, Chief Regulatory Officer of Emigrant Bank"

Author Information

Thomas P. Vartanian (Washington, DC) is the Executive Director of the Program on Financial Regulation & Technology at George Mason University’s Scalia Law School, where he is also a professor. Between 1983 and 2018, Professor Vartanian chaired the Financial Institution’s practices at the international law firms of Dechert LLP and Fried Frank LLP. Before that, he served in the Reagan Administration as General Counsel of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation. Between 1976 and 1981, he was a Staff Attorney and Special Assistant to the Chief Counsel at the Office of the Comptroller of the Currency. He also served as Chairman of the American Bar Association’s Cyberspace Law Committee between 1998 and 2002. He has been an adjunct professor of law teaching banking and electronic commerce law at Georgetown, George Washington and Boston University Schools of Law. He has guest lectured at Harvard Law School. He is also a contributing opinion editor at the Wall Street Journal, The Hill, and American Banker.

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