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• Case | HBS Case Collection | October 2018 (Revised January 2019)

  The Financial Crisis: Timothy Geithner and the Stress Tests

  Samuel G. Hanson, Robin Greenwood, David Scharfstein and Adi Sunderam

  In February and March 2009, the U.S. economy was in the midst of a terrifying financial and economic crisis. Between the beginning of 2008 and early 2009, four of the 25 largest U.S. financial institutions had failed, and nine of these 25 institutions had taken extraordinary steps to avoid failure—either receiving one-off government support, merging with another firm, or submitting to heightened regulation to qualify for future government support. Led by Treasury Secretary Timothy Geithner, the government had to quickly devise policies to stabilize the financial system and the economy. The case explores the details of policies, and the decision making process that led to them, that Geithner and his team devised under immense time pressure to stabilize the system. The case features an extended discussion of Geithner’s innovative “stress test,” which would reveal the longer-term health of the country’s largest banks.

  Keywords: bailout; regulation; Stress Test; Financial Crisis; History; Economy; Policy; Governing Rules, Regulations, and Reforms; Decision Making; Banking Industry; Financial Services Industry; Real Estate Industry; United States;

  Citation:

  Hanson, Samuel G., Robin Greenwood, David Scharfstein, and Adi Sunderam. "The Financial Crisis: Timothy Geithner and the Stress Tests." Harvard Business School Case 219-038, October 2018. (Revised January 2019.)  View Details

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• Article | Consumption, Markets & Culture | 2019

  Big Data

  John A. Deighton

  Big data is defined and distinguished from a mere moment in the “ancient quest to measure.” Specific discontinuities in the practice of information science are identified that, the paper argues, have large consequences for the social order. The infrastructure that runs on big data is described as diffusing with unprecedented speed but as being difficult to analyze and critique, and, therefore, the designers of society’s big data infrastructure, whether human or machines, play an unacknowledged legislative function of great consequence.

  Keywords: big data; digital infrastructure; privacy; algorithm; data generators; marketplace icon; Data and Data Sets; Infrastructure; Power and Influence; Society;

  Citation:

  Deighton, John A. "Big Data." Consumption, Markets & Culture 22, no. 1 (2019): 68–73.  View Details

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• Article | Journal of Financial Economics | January 2019

  Bubbles for Fama

  Robin Greenwood, Andrei Shleifer and Yang You

  We evaluate Eugene Fama's claim that stock prices do not exhibit price bubbles. Based on U.S. industry returns 1926–2014 and international sector returns 1985–2014, we present four findings: (1) Fama is correct in that a sharp price increase of an industry portfolio does not, on average, predict unusually low returns going forward; (2) such sharp price increases predict a substantially heightened probability of a crash; (3) attributes of the price run-up, including volatility, turnover, issuance, and the price path of the run-up, can all help forecast an eventual crash and future returns; and (4) some of these characteristics can help investors earn superior returns by timing the bubble. Results hold similarly in U.S. and international samples.

  Keywords: bubble; market efficiency; predictability; Price Bubble; Stocks; Price; Forecasting and Prediction;

  Citation:

  Greenwood, Robin, Andrei Shleifer, and Yang You. "Bubbles for Fama." Journal of Financial Economics 131, no. 1 (January 2019): 20–43. (Revised October 2017. Internet Appendix Here.)  View Details

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