Professor Raghuram Rajan Testifies to Senate Committee

Published on May 06, 2009

Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance, testified at a Senate Banking Committee hearing on “Regulating and Resolving Institutions Considered ‘Too Big to Fail,’” on May 6.

“Resources are trapped in corporate structures that have repeatedly proven their incompetence, and further resources are sucked in from the taxpayer as these institutions destroy value,” he said. “Indeed, these institutions can play a game of chicken with the authorities by refusing to take adequate precautions against failure, such as raising equity, confident in the knowledge the authorities will come to the rescue when needed.”

Watch Rajan’s testimony or read his full remarks.

Read more on the crisis from Rajan and other faculty who will be speaking at Management Conference.

                                                                                                                        —Patricia Houlihan