On October 3, Purdue University’s Krannert School of Management held a faculty panel discussion about the causes and implications of the current financial crisis facing the United States. That same day, the House of Representatives passed a $700 billion bailout bill previously approved by the Senate; President Bush immediately signed the bill into effect.

> Panelists:

David Denis, Professor of Finance and the Burton Morgan Chair of Private Enterprise, discusses the role of several contributing crisis factors, including subprime mortgages. Mark Bagnoli, Professor of Accounting and Olson Chair of Management, talks about the accounting methodology of “mark-to-market” and its role in the crisis. Kevin Mumford, Assistant Professor of Economics, covers the role of the housing market in the crisis. Kanda Naknoi, Assistant Professor of Economics, speaks about what the Bank of Japan did to respond to an economic crisis in that country. Jerry Lynch, Professor of Economics, discusses the ripples of the current crisis to Main Street.

> Questions:

The following questions were posed by the master’s students in attendance: How will the purchase of Wachovia by Wells Fargo, and other similar consolidations, affect the credit markets? Banks are currently not allowed to have more than 10 percent of national deposits. Will those regulations change, and what impact will that have? Even with the bailout plan, is there a risk that banks won't increase their lending practices? What are the effects of the U.S. financial crisis on the world markets? What are the consequences of the tax plans being proposed by the presidential candidates? If taxes on corporations are increased, what impact will be felt? What factors triggered financial institutions to lend subprime mortgages? Are there going to be any consequences for institutions that did not lend in good faith? What regulations should be implemented to ensure that this type of situation will not occur again?