Yesterday I had the privilege of giving a talk on my book Banking in Crisis to a packed audience at the Bank of England. The Bank has always taken banking history seriously. For example, it has commissioned several histories over the past 70 years - the most recent being Forrest Capie's Bank of England. The Bank is also holding a series of roundtables on past banking crises. I attended the first one of these yesterday, which was on the City of Glasgow crash. Charles Goodhart, Forrest Capie and I sat as external contributors to the roundtable and we were very impressed by the work done by the four economists who spoke about the City of Glasgow crisis.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...