Newswise — Robert Bliss, a former senior financial economist at the Federal Reserve Bank of Chicago who teaches finance at Wake Forest University, is available to discuss the federal government's $700 billion rescue plan to acquire troubled mortgage-backed securities from lenders.
"The size of the intervention is important for psychological reasons," Bliss says. "The Treasury does not have to spend the full $700 billion. Just having the authorization in hand may make it possible to achieve the purpose with smaller amounts. It does not follow, however, that a smaller authorization is sufficient. If the government is seen to be committed to supporting the financial system, the mood of market participants may reverse. If the government is seen to be uncertain of its own commitment, then the mood may get even worse."
Bliss, professor and F.M. Kirby Chair of Business Excellence at Wake Forest's Calloway School of Business and Accountancy, is an expert on banking, financial market regulation and insolvency resolution. He co-authored papers in 2003 and in 2006 outlining how liquidity problems at large complex financial organizations which were heavily involved in derivatives such as mortgage-backed securities could lead to system-wide failures.
He joined the Wake Forest faculty in 2004 after serving five years as senior financial economist and economic advisor at the Federal Reserve Bank of Chicago and previous posts as a senior researcher at the Bank of England and the Federal Reserve Bank of Atlanta. Bliss also taught at the Indiana University School of Business.
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