First, huge thanks and kudos to Erik and the Glom crew for being visionary. My version of letting no crisis go to waste is to assert that The Crisis is attributable entirely to the formerly niche status of banking and financial institutions in the law curriculum, which misled some of the best minds in the country to things like the Constitution and SOX, when we all should have been thinking about capital adequacy and systemic risk. But I digress. Bye-bye seminar caps, hello first-year lecture halls! Hooray for big screens and Heidi's graphics! And thank Goodness for the giants among us who knew the difference between FDICIA, FIRREA, FIRIRCA and FBSEA as it happened. I am deeply honored and humbled to be in their company.
My quick and dirty take on the course boils down to sequencing, central banks, and movies. The international dimension is a no-brainer, so I get to it last. But really, it is all about the movies. To wit, my only Dodd-Frank thought is on the visuals. I concur with everything DFA that has been said before.
Sequencing. Capital and Systemic Risk have to come super-early in the course, probably immediately after the definition of a bank. It makes no sense to wait until after geographic restrictions, which are weedy and not particularly binding anyway (not to be confused with activities and affiliation restrictions, which are a must). Another reason to start with capital is that it gets the bank balance sheet up on the board soonest. While we are on balance sheets, the Unidentified Financial Institutions exercise in the Jackson-Symonds book (pp. 14-26) is truly genius, though the book is more than a decade out of date. Maybe someone should start a wiki to put together balance sheets and income statements for all kinds of institutions, including shadow banks ...
Central Banks. The role of financial institutions in money creation is important, as is their access to the Lender of Last Resort. This ties in with systemic risk, shadow banking, runs and crises, aka major payoff. (Tradeoff? Chartering rules. Snooze.) The Fed is also a fabulous resource, with this and this just about enough to get you through. Bonus feature: Bernanke's Great Depression writing is remarkably accessible (I assign Nonmonetary Effects, minus the math section), and makes everyone feel very theoretical. Same goes for many Tarullo speeches, which come across as learned yet accessible to the law audience.
Movies. Breaking the Bank is just the right length, and can serve as a nice transition between banks and other financial institutions, or to set up crisis response, as well as affiliation material. My all-time favorite is Trillion Dollar Bet, which is more about systemic risk, hedge funds, derivatives, regulatory perimeter, funky hand gestures, and the perils of being filmed riding a golf cart. But honestly, I would find a way to show it in a physics or interpretive dance class. Don't miss the options pricing game on the website. Do miss Inside Job -- not enough substance, except maybe for an Economics Department consulting ethics module (do they have those?).
In the clips department, FDIC needs to get a real soundtrack for Never Lose a Penny. Davis Polk's Dodd-Frank miniseries must have a cult following, but Mad Men it isn't. On the bright side, Fidelity Fiduciary Bank is the hands-down favorite for content saturation and technical accuracy (safe and sound! compound! propriety! prudently!). Sadly, this YouTube sing-along version cuts off before the bank run, so make yourself a CD and post the lyrics. Below is my mature representation of the difference between banking and securities investing, using Jane and Michael Banks. Wicked popular with the pre-K crew.
International. Another reason to start with Mary Poppins: it frames banking as international and comparative from the start. How can you possibly understand our weird system without either historical (see Art's post) or cross-country context? Northern Rock is the ideal case study for deposit insurance, especially since the scheme that failed was a bright shiny modern one that had thought about moral hazard and tried to do the clever thing. Perfect foil for rusty ole FDIC. Iceland is good for home-host issues, which by the way is the way I deal with geographic restrictions, branching and subsidiaries. Wal-Mart Bank in Mexico is a five-fer: affiliations, activities restrictions, financial inclusion, consolidated supervision, and home/host/international coordination. But don't take my word for it; this Ortiz speech is the perfect length, and divisible in two. Bonus feature: even if you do not teach anything international, read Heidi's book with Michael Taylor, because it is the crispest account of banking of any sort, ever. I cannot wait for the movie version.
By the way, I understand that Basle might be the hipper way to write Basel, but that might reinforce the niche image, so better not. I do worship their statistics.
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