On the Global Economic Crisis

NovoCure Ltd.

Harvard Business School Case 9-810-045

William A. Sahlman, Sarah Greene Flaherty

Venture capitalist William Doyle must raise $35 million for a portfolio company with a promising, novel cancer therapy, just as global capital markets are imploding in the fall of 2008. NovoCure, Ltd., has developed an electrical-field-based therapy, called Tumor Treating fields, for the treatment of cancerous tumors. The therapy has shown significant efficacy with no side effects after five years of testing in human patients. Doyle believes NovoCure has the potential to become an important company with a major new cancer therapy platform, but must complete pivotal (Phase III) clinical trials and receive FDA approval. Doyle's venture capital firm, WFD Ventures, has invested $25 million in three rounds to fund pilot clinical trials for glioblastoma and other non-small cell lung cancer, and the first pivotal clinical trial for glioblastoma. Additional financing is needed to proceed with the strategically important second pivotal trial. In the fall of 2008 Doyle was negotiating the final terms of an investment by two prominent hedge funds when the liquidity crisis caused the hedge funds to withdraw from the transaction. Dole must now reevaluate his options for securing the needed financing for this promising young company. Purchase this case

The University of Notre Dame Endowment

Harvard Business School Case 9-210-007

Andre Perold, Paul Buser

The Endowment Model of Investing, which was based on creating high risk-adjusted performance through diversification, a long time-horizon, top-notch outside managers, and illiquid investments, had served Notre Dame and other large universities well over the past several decades. Scott Malpass, Notre Dame's Chief Investment Officer, was confident that this was a successful way to invest if implemented effectively, but he also saw the top university endowments experience up to 35 percent declines in portfolio value during the second half of 2008 that eviscerated the investment gains from the past several years. Notre Dame had weathered the crisis relatively well but there were several key questions Malpass had to address. Should Notre Dame continue to make illiquid investments in the context of rising unfunded commitments relative to liquid funds? Was compensation adequate for the illiquidity of these types of investments? In relation to manager selection, how could the Notre Dame investment team continue to find the best managers to create alpha? To what extent would the performance of managers during the crisis be predictive of future performance in other portions of the economic cycle? How would the long-established industry terms of contract between clients and managers change going forward? Was there an opportunity for clients to negotiate better terms? These issues all needed to be addressed in the context of protecting the University's operating budget and supporting the mission of the institution. Purchase this case

The Investment Fund for Foundations (TIFF) in 2009

Harvard Business School Case 9-210-008

Luis M. Viceira, Brendon C. Parry

The Endowment Model of Investing, which was based on creating high risk-adjusted performance through diversification, a long time-horizon, top-notch outside managers, and illiquid investments, had served Notre Dame and other large universities well over the past several decades. Scott Malpass, Notre Dame's Chief Investment Officer, was confident that this was a successful way to invest if implemented effectively, but he also saw the top university endowments experience 25% 35% declines in portfolio value during the second half of 2008 that eviscerated the investment gains from the past several years. Notre Dame had weathered the crisis relatively well but there were several key questions Malpass had to address. Should Notre Dame continue to make illiquid investments in the context of rising unfunded commitments relative to liquid funds? Was compensation adequate for the illiquidity of these types of investments? In relation to manager selection, how could the Notre Dame investment team continue to find the best managers to create alpha? To what extent would the performance of managers during the crisis be predictive of future performance in other portions of the economic cycle? How would the long-established industry terms of contract between clients and managers change going forward? Was there an opportunity for clients to negotiate better terms? These issues all needed to be addressed in the context of protecting the University's operating budget and supporting the mission of the institution. Purchase this case

BlackRock Money Market Management in September 2008 (A)

Harvard Business School Case 9-209-101

Kenneth A. Froot, David Lane

This case highlights the issues around money market mutual funds in the financial crisis of 2008. Purchase this case

Tengion: Bringing Regenerative Medicine to Life

Harvard Business School Case 9-510-031

Elie Ofek, Polly Ross Ribatt

Tengion is a young biotech company that is at the frontier of regenerative medicine; a nascent field that seeks to promote the creation of new cells and tissue to repair or replace tissue or organ function lost due to age, disease, damage, or congenital defects. In late 2008 Tengion management faces a difficult dilemma. In light of the financial crises, the company needs to manage cash burn by prioritizing its R&D efforts. CEO Nichtberger needs to recommend to the board which of two promising new medical treatments to keep developing while placing the other on hold. In comparing the two options, a host of factors need to be considered-- these range from assessing the regulatory challenges, manufacturing challenges, marketing challenges (in particular pricing), and partnering challenges. Each of the treatments would target a unique patient population, that differ in both size and composition. Tengion must also consider how quickly it might expect to bring each of the two treatments to market. The decision could have significant long-term implications for the company's ultimate survival and success. Purchase this case

Sitting Down With Jay Light

October 26, 2009 - Harbus

Jay O. Light

Jay Light comments on the economy and the influence it has had on the HBS curriculum.

Gucci Group: Freedom within the Framework

Harvard Business School Case 9-109-079

F. Asis Martinez-Jerez, Elena Corsi, Vincent Dessain

In September 2008, during the global economic downturn that followed the credit crunch crisis, Robert Polet, the CEO of the Gucci Group, had learned that after four years of growth, the Group's largest business, the fashion brand Gucci, would report a slowdown for the first semester. Polet had joined Gucci in 2004 after 26 years at one of the largest consumer goods companies Since his arrival, the Gucci Group had grown both in revenues and profitability. Part of his secret was his decentralized management style. Polet was worried because the economic crisis was reaching out the luxury world. He knew that he should leave the primary decisions for the Gucci brand to Lee. Yet, given the urgency of the situation, Polet wondered if more involvement from him in the brand's decision making process would not be more effective. Purchase this case

Citigroup-Wachovia-Wells Fargo

Harvard Business School Case 9-910-006

Guhan Subramanian, Nithyasri Sharma

In late September 2008, amidst the spiraling financial crisis, many firms on Wall Street were in a precarious position. One such institution was Wachovia, which entered acquisition talks with Citigroup and Wells Fargo. This case describes the development of these negotiations throughout the week of September 26-October 3, 2008 and explores the role of a company's Board of Directors and the role of government regulators, particularly the FDIC, during times of crisis. Purchase this case

HBS Curriculum Adapts to Meltdown

October 5, 2009 - Harvard Crimson

The changes that Harvard Business School has made to its curriculum in response to the financial crisis are explained.

Citigroup's Exchange Offer (A)

Harvard Business School Case 9-210-009

Robin Greenwood, James Quinn

Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. Purchase this case

Transworld Auto Parts (A)

Harvard Business School Case 9-110-027

V.G. Narayanan, Lisa Brem

Transworld Auto Parts had to implement its new strategy flawlessly to survive the auto industry upheaval. The new CEO asked her leadership team to craft strategy maps and balanced scorecards to help each division implement its strategies. Purchase this case.

The Termination of U.S. Auto Dealerships in 2009

Harvard Business School Case 9-210-017

Das Narayandas, Kerry Herman, Sarah Morton

The case chronicles the sudden termination of many U.S. autodealers in the wake of the economic crisis in the fall of 2008.

Tenova: Mining for Growth in an Economic Crisis

Harvard Business School Case 9-610-021

Gary P. Pisano, Elisa Farri, Elena Corsi

In December 2008, Gianluigi Nova, CEO of Tenova SpA, a technology and equipment supplier to the metals and mining industry, had to choose between two options. The first was to continue growing in the company's core business: equipment for the steel production. The second option offered growth in a related, but nearly new business for Tenova: the equipment for mining, mineral processing, and extractive metallurgy. They only had a small presence in this market. Yet, Nova had to cope with the worldwide economic crisis whose destructive power hit every area of the metals and mining industry. Nova had to decide which option offered the best opportunity to grow in the worst economic crisis since 1929.

Nomura's Global Growth: Picking Up Pieces of Lehman

Harvard Business School Case 9-210-017

C. Fritz Foley, Linnea Meyer

What issues commonly arise in international financial management? Kenichi Watanabe and Takumi Shibata, CEO and COO of Nomura Holdings Inc., one of the leading investment banks in Asia, have the opportunity to expand their firm internationally through the acquisition of various parts of Lehman Brothers, an insolvent global investment bank. In evaluating this opportunity, students must consider the complexities of such expansion, including the challenges posed by a multinational insolvency, the difficulties of post-merger integration in a cross-border acquisition, and more general issues related to currency hedging and international taxation.

Alacra, Inc.

Harvard Business School Case 9-810-012

Lynda Applegate, Aldo Sesia Jr.

In 2009, the CEO of Alacra, a venture-backed information services firm that provides customized data primarily to financial services firms, must decide how to respond to the global economic crisis.

MBAs Gone Wild (subscription required)

July/August, 2009 - The American Interest

Rakesh Khurana

Professor Khurana takes a look at business education in light of the recent economic crisis.

A Note on Cost Reduction in Financially Troubled Organizations

Harvard Business School Note 9-809-161

Paul Marshall

This note discusses methods for reducing costs, particularly labor costs, in a financially distressed organization.

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Spain: Can the House Resist the Storm?

Harvard Business School Case 9-709-021

Diego Comin

On September 16, 2008, President Rodriguez Zapatero recognized the severity of Spain's macroeconomic situation and clearly pointed to the culprit in front of the Spanish Congress: "Let nobody doubt it; there is already a wide consensus about the origin of the crisis: [It is] in the U.S. and its subprime mortgages." During the last eight years, Spain had gone through a phenomenal expansion that has had many important ingredients: immigration, housing boom, banking and financial market regulation, current account deficit and productivity growth. This case analyzes how they interacted during the period 2000-2007 and what drove the Spanish recession in 2008.

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Risk Management at Wellfleet Bank: Abridged

Harvard Business School Case 9-110-011

Anette Mikes

Inspired by one of the few banks that successfully weathered the 2007-2009 credit crisis, the case illustrates risk management in the world of corporate lending. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks, based on reflections on the risk assessment and sanctioning of a $1 bn credit proposals. Students will be invited to assess and review the risks in the proposal, and to arrive at a decision (whether Wellfleet should accept it or not). At the same time, students will learn that gray-area risk decisions and, in particular, risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment - a holistic (rather than silo-based) view of risks.

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What Happened at Citigroup?

Harvard Business School Case 9-310-004

Clayton Rose, Aldo Sesia Jr.

What went wrong at Citigroup? In 1998, the Travelers Group and Citicorp merged to create Citigroup Inc., considered the first true global "financial supermarket" and a business model to be envied, feared, and emulated. By year-end 2006 the firm had a market capitalization of $274 billion, with $1.9 trillion in assets and $24.6 billion in earnings. But, ten years after the merger, it ended in tears. In July 2009, the firm was effectively nationalized, with billions of dollars in bailout money converted into a 34% ownership stake for the U.S. government. Citigroup was worth less than $16 billion, having lost more than $250 billion in value from its peak. This case examines Citi's business model, the challenges it faced, its leadership, and key decisions to better understand what contributed to the failure of one of the most powerful financial firms in the world. Purchase this case

Executive Pay and the Credit Crisis of 2008 (B)

Harvard Business School Case 9-110-005

V.G. Narayanan, Lisa Brem

As the recession lingered on into 2009, the U.S. government sought to limit executive pay and excessive risk. The debate raged over what constituted excessive risk and how best to mitigate it. This case describes the government restrictions on executive pay for TARP recipients and delves into the debate on executive compensation and incentives that encourage excessive risk. Purchase this case. Also see Executive Pay and the Credit Crisis of 2008 (A)

Note on Capital in the U.S. Financial Industry

Harvard Business School Note 310-005

Clayton Rose and Scott Waggoner

This note was created to supplement classroom discussion in the EC course ""Managing the Financial Firm,"" and provides background for exploring issues general managers in financial firms face in considering appropriate capital levels.

Arcor: Global Strategy and Local Turbulence (Abridged)

Harvard Business School Case 9-710-407

Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes

Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, while recovering from the Argentine financial crisis, globalization plans are thwarted. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis. Purchase this case

Target Corporation: Ackman versus the Board

Harvard Business School Case 9-109-010

Suraj Srinivasan, Krishna G. Palepu, James Weber

After 15 years of great performance, Target's faltering performance during an economic downturn led an activist shareholder to initiate a proxy fight. Target Corporation, the second largest discount store retailer in the U.S., had competed successfully against industry leader Wal-Mart for years by promoting an upscale discount shopping experience in comparison to Wal-Mart's focus on low prices. This strategy worked well for Target in good economic times. The economic crisis of 2008-2009, however, caused shoppers to abandon Target in favor of Wal-Mart. In the spring of 2009, one of Target's largest shareholders initiated a proxy fight to place his five director nominees on the board. Target won the proxy fight, but still faced questions about whether it had a strategy that could work in both good times and bad. Purchase this case

A Promise to Be Ethical in an Era of Immorality

May 29, 2009 - New York Times

The new HBS student led oath which is going "to bring about a professional code of conduct for M.B.A.'s, not unlike oaths that are taken by lawyers and doctors" is discussed.

Going to the Oracle: Goldman Sachs, September 2008

Harvard Business School Case 9-309-069

Clayton Rose, David Lane

On September 23, 2008, in the midst of a historic crisis in the U.S. financial markets, Warren Buffet's Berkshire Hathaway invested $5 billion in Goldman Sachs. This case provides an opportunity to evaluate Goldman's decision to raise capital, the cost of the firm of Buffett's investment and the decision by Warren Buffett to make the investment, all in the context of a profound market crisis that may have altered the usual metrics for such decisions. Purchase this case

Change is in the Offing

May 7, 2009 - Harvard Business Publishing

Jay O. Light

Dean Jay Light comments on changes at Harvard Business School and opportunities for innovation and change at business schools moving forward in response to the financial crisis.

The First Global Financial Crisis of the 21st Century

Harvard Business School Case 9-709-057

Laura Alfaro, Renee Kim

The global economy was expected to suffer from negative growth for the full year in 2009, a phenomenon not seen since World War II. While the U.S. subprime mortgage disaster was blamed as the original instigator, it was noted that the "global imbalances" of the U.S. current account deficit funded for many years by other nations such as China was also a chief culprit of the crisis as well. Policymakers around the world recognized that the scope and scale of the financial crisis required a coordinated global response. Yet there were conflicting views on what kind of action was needed to address the first global financial crisis of the 21st century. Purchase this case

U.S. Subprime Mortgage Crisis: Policy Reactions (B)

Harvard Business School Case 9-709-045

Laura Alfaro, Renee Kim

In March 2009, the U.S. economy was in a severe recession not seen since the Great Depression after the subprime mortgage crisis had spiraled out of control. The situation had dramatically changed in one year since the Federal Reserve Board had helped to bailout investment bank Bear Stearns. Deflation, not inflation, had become a top concern. Interest rates were near zero percent. Five million jobs had been lost. The new Barack Obama administration had push forward with a $787 billion stimulus package, coupled with various programs to address the frozen credit markets and depressed investors' confidence. Yet the burning question in every policymakers' mind was--how effective would the various plans work to revive the U.S. economy? See related case, U.S. Subprime Mortgage Crisis: Policy Reactions (A)

Before the Fall: Lehman Brothers 2008

Harvard Business School Case 9-309-093

Clayton Rose, Anand Ahuja

This case examines Lehman Brothers in the months preceding its collapse. Following the announcement of a huge and unexpected second quarter loss, the CFO was removed from her post after only seven months in the job. This case explores the challenges faced by a firm leader as she attempts to manage a situation that threatens the firm's survival. In particular, the case allows for an examination of how changes in a firm's performance and position are communicated to key external stakeholders in an effort to retain their confidence, while market conditions worsen, the balance sheet deteriorates, and the firm's credibility is challenged by a short-selling hedge fund. Purchase this case

Kinyuseisaku: Monetary Policy in Japan (B)

Harvard Business School Supplement 709-056

Laura Alfaro, Renee Kim

Toshihiko Fukui, Government of the Bank of Japan, faced a complex situation in the fall of 2007. An economic recovery had allowed the central bank to abandon its zero interest rate policy, which had been in place for years, and raise rates to 0.5%. The Bank of Japan was eager to increase them to more 'normal' levels to exert effective monetary policy. Yet the appropriate timing and approach was a controversial issue, especially as the government did not want a rate hike that could potentially hinder economic growth and increase its already large fiscal debt burden. Purchase this supplement

Note: The Rejuvenated International Monetary Fund

Harvard Business School Note 709-050

Rawi Abdelal and Jonathan Schlefer

The International Monetary Fund was dismissed as almost irrelevant to the global economy, but during the 2008 financial crisis, it returned to center stage, providing financial rescues for developing countries. Purchase this note

Note: The Newspaper Industry in Crisis

Harvard Business School Note 709-463

David Collis, Peter Olson and Mary Furey

This note is a primer on the newspaper industry, which has been in decline in the U.S. and Western Europe. The 19th century business model whereby news and editorial content was packaged and delivered to homes daily and paid for by national advertisers has been overturned by the internet and the corresponding immediate access to global information. The note covers the history of newspapers, industry economics, current news consumption trends, the response of the newspapers to the threat of the internet, and vignettes highlighting newspaper business models throughout the world. Purchase this note

UBS and Auction Rate Securities (A), (B) and (C)

Harvard Business School Case 9-209-119

Daniel B. Bergstresser, Shawn Cole and Siddharth Shenai

UBS, a global financial services company, must decide whether to continue to support the market for Auction Rate Securities in the face of a growing financial crisis. These instruments, underwritten by UBS, were marketed to clients as highly liquid and safe alternatives to cash. UBS' decision becomes urgent when Citigroup, another leading underwriter of ARS, decides to let their auctions fail, leaving clients with illiquid assets of uncertain value. The case explores theoretical and practical aspects of liquidity risk, and challenges students to evaluate the benefits of honoring implicit commitments to customers against the costs of acquiring billions of dollars in illiquid assets. The (B) and (C) cases consider the implications of UBS decision. Purchase this case

Washington Mutual's Covered Bonds

Harvard Business School Case 9-209-093

Daniel B. Bergstresser, Robin Greenwood, James Quinn

Washington Mutual issued 6 billion Euro of covered bonds in 2006. The objective of the case is to ask whether these bonds are mispriced in late 2008. The case is set in September 2008, and Washington Mutual is facing considerable distress due to mounting losses on its mortgage portfolio. Following investment bank Lehman Brother's Chapter 11 bankruptcy protection filing in mid September, the price of Washington Mutual's covered bonds has fallen to 75 per 100 of face value. As these bonds are overcollateralized, the case asks students to evaluate the underlying collateral portfolio in the event of liquidation, as well as assessing the likelihood of different outcomes. Purchase this case

Chronology of the Asian Financial Crisis (revision)

Harvard Business School Case 9-708-001

Laura Alfaro, Rafael Di Tella, Renee Kim

In July 1997, Thailand became the first Asian ""tiger"" economy to abandon its fixed exchange rate system in response to speculative attacks on its currency. Investors started to flee Asia, and the crisis rapidly spread to other countries. Central banks spent billions of dollars to try and defend their currencies, only to seek emergency bailouts from the International Monetary Fund. This case presents a chronology of events that unraveled during the Asian financial crisis from 1997 to the end of 1998. Purchase this case

Harvard Business School Evaluates Past Performance

April 9, 2009 - Harvard Crimson

This article discusses the in-progress case study which takes a look at HBS's preparation of students on the lead-up to the economic crisis.

Harvard Begins Case Study as Tainted MBAs Reveal Damaged Brand

April 2, 2009 - Bloomberg News

Paul Healy discusses the HBS brand, and the case study an HBS task force is now undertaking to "scrutinize whether the school is failing to teach students to understand and manage risk in the current environment."

State Street Corporation

Harvard Business School Case 9-209-112

William E. Fruhan Jr.

State Street Corporation reports a 13% gain in EPS in 2008 amidst a global financial crisis. The stock price declines 59% on the day of the earnings report. This one-day decline was exceeded in the prior 12-month period by only one non-bankrupt S&P 500 company. That company was AIG, Inc., which declined 61% on the day Lehman Brothers declared bankruptcy. While State Street reported $5 billion in profits over the 4-year period 2005-2008, the company also sustained $10 billion in after tax mark-to-market losses on its "available for sale" investment portfolio and the investment portfolios of its conduits. The question is, how has the firm performed over the past four years? Has it earned $5 billion or lost $5 billion? Fair value accounting plays a key role in the dilemma. How should a financial services firm measure and report income in the face of disorderly and illiquid markets for its principal assets? The case also examines how management at State Street responded to the deterioration in its capital ratios generated by "fair value" accounting. Purchase this case

Barbara Norris: Leading Change in the General Surgery Unit

Harvard Business School Case 9-409-090

Boris Groysberg, Nitin Nohria, Deborah Bell

Barbara Norris struggles to address the many problems facing her as a recently promoted nurse manager in the General Surgery Unit (GSU) at Eastern Massachusetts University Hospital (EMU). She has inherited a unit with the lowest employee satisfaction scores and highest employee turnover rate among all of the departments at EMU. Furthermore, her new unit was infamous for its culture of confrontation, blaming and favoritism. The staff that has remained is dissatisfied, unmotivated and not functioning as a team to deliver patient care. In fact, GSU's patient satisfaction scores, although average, had been declining steadily over the past few years. Barbara has been asked by EMU'S Director of Nursing to turn the unit around in the midst of an economic crisis and deep cost-cutting measures throughout the hospital. Where and how should she begin? Purchase this case

Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis

Harvard Business School Case 9-709-041

Aldo Musacchio, Dante Roscini

This case describes the efforts of Ben Bernanke, Chairman of the Federal Reserve, to improve liquidity in money markets during the subprime crisis. The case explains the four main new tools for monetary policy (or quantitative easing) the Federal Reserve has used between 2007 and 2009: the Term Auction Facility (TAF), the Primary Dealer Credit Facility (PDCF), the Term Securities Lending Facility (TSLF), and the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF). Purchase this case

Barack Obama and the Bush Tax Cuts

Harvard Business School Case 9-709-037

Matthew Weinzierl, Eric Werker

As his inauguration approached, President-Elect Obama faced a financial sector meltdown, a costly bailout, and massive government deficits. With the economy in recession, interest rates near zero, and joblessness on the rise, Obama needed to decide whether, and how much, to use fiscal stimulus to resuscitate the economy. To help students understand Obama's options, the case reviews both the recent tax cuts under President George W. Bush, including the supply-side and demand-management justification given for them, and the broad history of fiscal policy in the United States. Purchase this case

Staying Ethical In The Age Of Madoff

February 6, 2009 - Forbes

Umaimah Mendhro and Abhinav Sinha, both second-year students at Harvard Business School, discuss lessons in ethical leadership. They have recently "completed a field research study with professor David A. Garvin on the topic of morality under the context of corruption, focusing on leaders in Pakistan and India."

The Tip of the Iceberg: JP Morgan Chase and Bear Stearns

Harvard Business School Supplement 309-091

Clayton Rose, Daniel B. Bergstresser, David Lane

This case examines a seminal event in the financial and economic crisis that began in the summer of 2007, and provides background for better understanding the full scope of the crisis as it was revealed during the summer and fall of 2008. It was written to address two sets of issues. First, it provides the opportunity to understand the corporate finance issues of capital and liquidity, and of firm valuation. Second, the case allows for the exploration of aspects of a firm's internal and external governance, as well as the challenges of navigating through a crisis when faced with compelling pressures from competing stakeholders. Purchase this case

The Financial Crisis of 2008

Harvard Business School Case 9-709-036

Gunnar Trumbull

This case presents excerpts from the speeches of observers to the 2008 financial crisis, including former and current central bankers, a private banker, and a Nobel-prize winning economist. They present different interpretations of the causes of the financial crisis and make proposals about how a similar crisis might be stopped in the future. The goal of the case is to provide students with alternative perspectives and broad historical data so that they can evaluate both causes of and responses to the crisis. Purchase this case

Today's Mistakes Can Teach Tomorrow's Leaders

December 15, 2008 - Globe and Mail (subscription required)

Rob Kaplan is interviewed on his time at Goldman Sachs, his transition to becoming a professor at Harvard Business School, and the root causes of the economic crisis.

Rosetree Mortgage Opportunity Fund

Harvard Business School Case 9-209-088

Andre F. Perold, Victoria Ivashina

In December 2008, in the midst of the worst financial crisis since the Great Depression, Rosetree Capital Management was evaluating the purchase of a pool of U.S. residential mortgages. The firm had formed an investment vehicle to acquire troubled residential mortgages from banks and other motivated sellers. The idea was to purchase mortgage loans at a discount and to work with individual borrowers to restructure their debts. Performing mortgages could then potentially be resold in the secondary market. The case provides cash flow projections in various economic scenarios that are revealing of the economics of troubled mortgages and home foreclosure. Rosetree needed to decide whether and how much to bid for the loans. Purchase this case

The Leadership Imperative

November 19, 2008 - Forbes

Dean Light states how Harvard Business School is adapting to the crisis by adjusting curriculum. He also explains that business schools have accepted some of the blame for the current situation, but are remaining focused on producing business leaders for the future.

Crisis Hits the Business Schools

November 13, 2008 - Business Week

While the number of applications to business schools has increased due to the recession, the number of jobs available for graduates has steeply declined. Daniel Bergstresser and Clayton Rose comment.

Management Must Become a Profession

October 20, 2008 - Financial Times

Rakesh Khurana and Nitin Nohria

In the face of the recent institutional breakdown of trust in business, managers are losing legitimacy. To regain public trust, management needs to become a true profession in much the way medicine and law have, argue Khurana and Nohria of Harvard Business School.

Sub-Prime Crisis and Fair Value Accounting

Harvard Business School Case 9-109-031

Paul Healy, Krishna G. Palepu, George Serafeim

This case examines the challenges in implementing fair value accounting for mortgage instruments, the role of accounting in the sub-prime crisis, and proposals for revising accounting standards given the crisis. Purchase this case

Financial Crisis in Asia: 1997-1998 (Abridged)

Harvard Business School Case 9-709-004

Huw Pill, Rafael Di Tella, and Jonathan Schlefer

What caused the 1997-98 Asia Crisis: Asian nations' poor economic management, international financial contagion, close "crony" relations between local politicians and capitalists? This case examines how the crisis erupted in Thailand and spread in a chain of events that no one-neither Asian financial authorities nor Western economists-had foreseen. Purchase this case

Executive Pay and the Credit Crisis of 2008

Harvard Business School Case 9-109-036

V.G. Narayanan, Fabrizio Ferri, Lisa Brem

The credit crisis of 2008 placed compensation practices at publicly traded firms in the United States under scrutiny. This case examines perceived excessive pay and severance packages at several firms implicated in the credit crisis of 2008, the executive compensation provisions in the Emergency Economic Stabilization Act, and discusses the implications for compensation committees at public companies. Purchase this case

New Century Financial Corporation

Harvard Business School Case 9-109-034

Krishna G. Palepu, Suraj Srinivasan, Aldo Sesia Jr.

New Century Financial Corporation, one of the largest subprime loan originators in the U.S., reported accounting problems in early 2007. The resulting liquidity crisis forced the company to file for Chapter 11 bankruptcy protection. The case study examines New Century's business model and accounting practices and focuses on the role of management, audit committee, and external auditors in the problems at New Century based on the findings of the Bankruptcy Examiner. Purchase this case

Hard Lesson

September 29, 2008 - Boston Globe

HBS is working with recent graduates who had taken jobs at troubled firms such as Lehman Brothers and Merrill Lynch. "We wanted to help them navigate very choppy waters," said HBS's Jana Kierstead, managing director of MBA career services. "What they thought they signed on for has changed. The dynamics of the industry have changed. So they each have to decide whether they want to pursue other opportunities." In addition, HBS professors have already begun researching case studies on the bank failures.

Professors Plan Bear Stearns Case Study

September 25, 2008 - Harvard Crimson

HBS Senior Lecturer Clayton Rose and Assistant Professor Daniel Bergstresser are writing a case about the collapse of Bear Sterns which will be taught jointly to the first-year finance and corporate leadership classes in April 2009. "The events that led to the collapse of Bear Stearns represent one of the focal events in American financial history," said Bergstresser. "Until the market events of last week, the collapse of Bear was the major financial event of the last 10 years."

Note: Credit Rating Agencies

Harvard Business School Technical Note 9-209-056

William E. Fruhan Jr.

The note examines the role of credit rating agencies in capital markets, with emphasis on the role of these agencies in the recent credit crisis and recommendations for change. Purchase this note

Iceland (A) and (B)

Harvard Business School Case 9-709-011

Aldo Musacchio

In May of 2008, a team of sovereign debt analysts at Moody's had to decide whether to downgrade the country's sovereign long-term debt from Aaa to Aa1 or lower. Investor sentiment toward Iceland had changed radically in March, and the Moody's team was fearful that the situation could spiral out of control. The Moody's team knew that carry traders increased Iceland's vulnerability to a confidence crisis because they were quick to liquidate their holdings at the first sign of distress. The plunge in the Icelandic Krona since the beginning of 2008 also forced the Icelandic people to confront a decision: would joining the European Union (EU) protect Iceland from capricious swings in investor sentiment? What, if anything, should Iceland do to avoid a future crisis? Purchase case A and Purchase supplement B

Leveraged Loans 2007

Harvard Business School Case 9-208-145

Andre F. Perold, Erik Stafford

The leveraged loan market was in a crisis during the summer of 2007. A sudden drop in capital market prices for an asset class can be caused by news affecting fundamental values; or by a widespread liquidity shock. The implication of a shock to fundamental value is that the price drop is permanent, whereas if the underlying cause of the price drop is caused by a liquidity event, the situation may represent a profitable investment opportunity. Investors must assess the likely cause of the recent price drops in the leveraged loan market and determine an appropriate investment strategy. Purchase this case

Note: The Hedge Fund Industry

Harvard Business School Technical Note 208-126

William E. Fruhan Jr.

This note describes the state of the hedge fund industry as of the end of the year 2007. Purchase this note

Subprime Meltdown: American Housing and Global Financial Turmoil

Harvard Business School Case 708-042

Julio J. Rotemberg

This case focuses on the financial difficulties faced in the U.S. from August to December 2006 as well as their roots in subprime lending. After briefly discussing how mortgages were structured and traded in the pre-1990 period, it describes subprime mortgage lending, as well as other innovative mortgages issued in the 1990s. It also discusses how these mortgages were packaged into securities, and who ultimately came to own these claims and their attendant risk. The case then describes the pain inflicted by raising foreclosures, as well as the financial market ramifications of the rise in mortgage delinquencies. It also chronicles the response of the U.S. and European central banks to the unfolding financial difficulties. Lastly, the case lays policies that have been proposed to deal with either the consequences or the causes of the crisis. These include policies for reforming the supervision of the financial system, changing bankruptcy rules and regulating mortgage finance. Some attention is paid to the role of credit rating agencies in the crisis, and in the financial system as a whole. Purchase this case

U.S. Subprime Mortgage Crisis: Policy Reactions

Harvard Business School Case 708-036

Laura Alfaro, Renee Kim

By March 2008, the U.S. Government and the U.S. Federal Reserve Board had taken various policy measures over the last few months to tackle the subprime mortgage crisis that threatened to drag the economy into a recession. The Bush administration approved a fiscal stimulus package exceeding $150 billion. Interest rates had been repeatedly cut at the fastest pace in decades, to 2.25% as of March 2008. The Fed, in an unprecedented move, helped JPMorgan Chase to take over Bear Stearns, which was on the brink of collapse. Yet as the global economy faced slower growth stemming from the U.S. mortgage crisis, policy makers were caught in an intense debate over what the 'right' solution would be, and the implication of these policies on global imbalances. Purchase this case

Kinyuseisaku: Monetary Policy in Japan

Harvard Business School Case 9-708-017

Laura Alfaro, Akiko Kanno

Toshihiko Fukui, Governor of the Bank of Japan, faced a complex situation in the fall of 2007. An economic recovery had allowed the central bank to abandon its zero interest rate policy, which had been in place for years, and raise rates to 0.5%. The Bank of Japan was eager to increase them to more 'normal' levels to exert effective monetary policy. Yet the appropriate timing and approach was a controversial issue, especially as the government did not want a rate hike that could potentially hinder economic growth and increase its already large fiscal debt burden. Purchase this case

Korea: After the 1997 Financial Crisis

Harvard Business School Case 9-707-042

Laura Alfaro, Rafael Di Tella, Renee Kim

Examines what happened to Korea after the 1997 financial crisis and the implementation of the IMF-mandated reforms imposed on Korea as conditionalities to the country's emergency loan package. Purchase this case

The U.S. Current Account Deficit

Harvard Business School Case 706-002

Laura Alfaro, Rafael Di Tella, Ingrid Vogel

Investors and policymakers throughout the world were confronted with the risk of painful economic consequences arising from the large and growing U.S. current account deficit. In 2005, the U.S. current account deficit was almost $800 billion, equivalent to 6.3% of GDP, and showed no signs of abating. The implications of the widening deficit were debated with intensity. Purchase this case