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Big banks did not cause the banking crisis in the U.S. and around the world. Excessive risky lending practices and lack of regulations and supervision did.
That’s one message Dr. Jim Barth, Lowder Eminent Scholar in Finance at Auburn University and Senior Finance Fellow at the Milken Institute, will share Monday, April 29, at the 16th Annual Milken Global Conference in Beverly Hills, Calif.
“If banks book bad loans, we’re going to have problems whether they are big or small,” said Barth, who will join a five-person, one-hour panel to discuss “Global Financial Regulation.”
“We’ll talk about ‘Too Big to Fail’ and other related issues,” Barth said. “To limit the size of or break up banks is to delude one’s self into believing that our banking problems are behind us. Small banks can make risky loans that can cause trouble too.”
Barth, who co-authored the book “Guardians of Finance,” which told the story of financial events and regulatory failures leading up to the financial crisis which began in 2007, defined excessive risky loans as “making loans to people or businesses who can’t re-pay, and having too little capital at the banks to cover losses on the loans.”
Barth has been a fixture within the Auburn College of Business since 1989.
The Global Conference is a five-day (Saturday, April 27, through Wednesday, May 1) event featuring some of the greatest financial, political and social minds on the planet with an estimated 600 speakers and 3,000 attendees from 60 nations and every state in the U.S.
Some of the guest speakers include former British Prime Minister Tony Blair, former U.S. Vice-President Al Gore, business mogul Bill Gates, media magnate Rupert Murdoch, Senate Majority Leader Harry Reid, House Majority Leader Eric Cantor, and a number of other congressmen and CEOs.
“The purpose is to bring people together from the business world, government and academia to talk about current problems and ways to solve those problems in the areas of health care, education, finance and energy,” said Barth, who was appointed by presidents Ronald Reagan and George H.W. Bush as Chief Economist of the Office of Thrift Supervision in the 1980s. “It’s meant to bring together people who can influence and change policy, and to address the most important problems in the U.S. and other nations. A lot of the problems are global and are not unique to the U.S.”
Though Barth may be an educator and renown financial expert, he too, looks forward to the five days of education.
“It’s an opportunity to enrich my knowledge,” said Barth, who has attended all prior Milken Institute Global Conferences. “We have lots of very smart, influential people talking about a variety of topics. I will learn from other people’s views and their proposed solutions to our problems.
“Not everyone will agree. That’s another way I can learn — to decide for myself what is the best side regarding an issue. Should there be more regulation? Should there be less regulation? Is regulation too burdensome? Are banks spending too much to comply with new regulatory changes? What is a better place to talk to people about these issues? It’s a good meeting place for people who want to improve the world in many dimensions.”