Part of the fun of writing a book is that you get invited to give talks on it at cool places. This Friday evening I'll be talking about my book Banking in Crisis at the Library of Mistakes in Edinburgh. The idea of this library, which was the brainchild of Russell Napier, is that it contains books on business, economic and financial mistakes so that the present and future generations learn not to repeat them. It is a great idea. Hopefully my book on the history of British banking crises contributes something to our knowledge of why crises happen and how they can be prevented (if there is the political will).
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