Our Research Centers: Center on Finance, Law, & Policy

Hello. My name's Rebecca Cohen and I'm the Senior Communication and Outreach Specialist at the Ford School. I'm also an alum, and so excited that you're considering joining the Ford School community. As we get started, please use the chat box to let us know where you're logging in from and also why you're interested in financial policy. As you may have heard, we will be hosting a virtual Spring Preview this year, and we're working hard to expand opportunities to engage with faculty, students, and alumni online. Please check back to The Future40's web page for more updates and recordings of the webinars we've held already.

Today, we have a special panelist who will share information about the Center on Finance, Law and Policy, or CFLP, and how you as a student can get involved. We'll leave lots of time for questions. Today, we're going to try something a little bit different than we've done in our previous webinars. If you are comfortable with saying your question live, please indicate that with your question by adding the word "live". When we're ready to take your question, we'll unmute you and ask you to read your question aloud. Otherwise I'll read your question to Dean Barr.

So with that, I wanna introduce Michael Barr, the Joan and Sanford Weill Dean of Public Policy and faculty lead for the Center on Finance, Law and Policy. Today he'll speak to his role with CFLP and he will also be a featured panelist during our virtual Spring Preview on April 3rd. Michael, why don't you take us away.

Thanks so much for Rebecca and thanks for all of you for participating online in this new format we're trying in the current environment. I hope everybody is staying home and staying safe and staying healthy. It's really a joy to be able to talk to you today about the Center on Finance, Law and Policy, which is an interdisciplinary research center I started a few years ago. And I've stayed as faculty director of that center while also serving as Dean of the Ford School. As Rebecca mentioned, I'm gonna have a chance to talk to you about the Ford School more broadly during our virtual Spring Preview next week. And for today's webinar, I'm really just focused on the Center on Finance, Law and Policy.

The Center brings together faculty and staff and students from across the University of Michigan to wrestle with really difficult problems in finance. We have faculty and students from the Ford School of Public Policy, from the law school, from the business school, from the College of Engineering and the School of Information. We have students and faculty who have come to us from the history department, from psychology, from philosophy even. So it really is bringing together all the best minds across the university to really wrestle with problems that we're facing today. I'll give you some examples. You know we're in the middle of a deep economic problem that is part of our public health problem that we're dealing with today, and so we're seeing lots of efforts by the Fed and by Treasury to prop up financial markets to make sure they're continuing to work. And we saw a big move by the Senate and probably the House today to inject new resources into the economy. We're trying to figure out what should the Fed and Treasury do? How should they act in this uncertain environment? What steps could they take to help reduce unemployment? What steps could be done to really assist small businesses around the country as they're facing this unprecedented economic crisis? Based on what we learned from the 2008 financial crisis, what should we be doing today, and how is the current crisis different? 

We're also looking at longer-term problems. What works in helping small businesses deal with complicated finances? How can we help them improve? We're looking at problems in high frequency trading markets. Trying to think about market manipulation in high frequency trading markets, and what could be done to make those markets work more efficiently and be more fair for everybody participating in trading. We're thinking about how to support community development finance that's on the front lines in helping many low-income communities in urban and in rural areas.

So the CFLP is wrestling with all these issues. We got started a few years ago and really came out of my experience serving in the Treasury Department in the Obama Administration. During the presidency of Barack Obama, I was in the White House and then at the Treasury serving as an Assistant Secretary for financial institutions. And I was very involved in what became the Dodd-Frank Wall Street Reform Act and the creation of the new Consumer Financial Protection Agency. And these initiatives led me to believe that when I came back to academics, we really need to have much more creative thinking from lots of different perspectives. Not just finance, not just law, but all the different kinds of ways that one can study and learn here at the University of Michigan to work on these really difficult issues. And to try and make our financial system be considerably more fair, considerably safer, and better harnessed to the needs of households and businesses in the real economy. So it's a project that has been going on for many years and it's really important for making our financial system work better for everybody.

Let me give you some examples, I mentioned briefly some of them, but some examples of the projects we're working on. We're working at the local level, at the state level, nationally and internationally. At the local level, for example, we started a project called the Detroit Neighborhood Entrepreneurs Project. The Detroit Project works with neighborhood-based businesses in the city of Detroit which has been struggling economically for many years but is starting to really come back. We're seeing lots of great entrepreneurial energy and small business energy in Detroit. But many neighborhood-based businesses, they're mostly minority-owned, mostly women-owned, have difficulty getting access to all the full range of skills and support they need to be able to access capital, to be able to get new business.

So we work in interdisciplinary teams. Faculty and students from across the university from the Ford School, from the Ross School of Business, and the law school, and also our Stamps School of Art and Design are working together to support these neighborhood businesses with wraparound services. We've had Ford School students, for example, doing community surveys and community impact studies. We've had law school students helping with issues of intellectual property protection or leases. Design students working on branding and logos. And marketing students from the Ross School of Business helping with marketing efforts and also accounting.

The support we provide varies business to business, but what's really special about it is the ability for students to work across the schools together under faculty supervision to help businesses make a real difference on the ground. It's a wonderful learning experience. We also have students working with us on a range of research projects. I mentioned the high frequency trading project already. Another project we're doing at the international level is working with the Gates Foundation on a project called Central Banks of the Future. And in the Central Banks of the Future project, we're working with the Gates Foundation and with student researchers to try and figure out on a global scale how technology is affecting central banking, and what role could central banks play in actually making the financial system in their country better suited to serving poor people, to serving low and moderate income individuals really around the globe. So we're looking at how central banks in the developing world can use this new technology to make improvements that are really for making everybody better off.

We've also launched a Fintech collaboratory that students have the opportunity to work in and to learn from. Our Fintech collaboratory, again, is cross-university with the Ross School of Business, and College of Engineering, and the Ford School working together. Fintech is an exciting new area. Fintech means the intersection of financial and technology approaches to solving problems. So, Fintech start-ups around the world are trying to bring technology to bear on all kinds of problems in finance. And our Fintech collaboratory lets students get real-world experience working with potential clients, and it also has the opportunity to learn from experts in the field. I'll give you one example. We have on our faculty now a professor of practice, Adrienne Harris. Adrienne comes to us as a former Obama Treasury and White House official, and as the former general counsel of a Insurtech start-up in the Bay Area. Insurtech means the combination of insurance and technology. And Adrian's been teaching a class at the Ford School on Fintech policy and Fintech entrepreneurship that I think is really, really exciting.

So we have these projects going on in lots of areas, I mentioned a couple of them, two, three of them, but we have a number of projects going on under a number of different faculty leads, and it's a really great opportunity for students to get involved in research and in hands-on work in the community. Another thing that we've done for many years is organize conferences, and workshops, and seminar series. We have an annual conference, for example, that we host jointly with a part of the federal government, known as the Office of Financial Research. The Office of Financial Research was set up in the wake of the 2008 financial crisis to help the country better understand risk in the financial system.

And we co-host an annual conference with the OFR that is focused on financial stability issues. We've done it every year now for the last five years and it's really a wonderful experience. And we've done some of them here in Ann Arbor, hosted at the University of Michigan campus, and some of them we hosted in the Treasury building in Washington DC. So we've gone back and forth on that. We also host often an additional conference, a big conference every year on different topics. For example, we held a conference a couple of years ago on behavioral finance, looking at the way in which lessons from psychology and behavioral economics should change the way we think about financial transactions. How do we better support consumers? How do we deal with risk in the system? How do we protect investors? And all of that is really exciting for our students to see. That conference we hosted over at the Ross School of Business. Again, we like to move around campus and showcase the strength of the university as a whole.

Because I do think one of the strengths of the Ford School, in addition to it being a wonderful place to be inside the Ford School, one of our strengths is our collaboration across the whole of the University of Michigan campus. And so we have this incredible collaborative spirit that enables us to learn from scholars and students from lots of different backgrounds, with lots of different experience and lots of the different approaches to solving problems. I think that's an amazing, amazing opportunity. And the CFLP, and the Ford School more broadly, likes to take advantage of that.

Let me say a little bit more about ways for students to get involved in the CFLP. I've mentioned some. The key initial way is for students to take classes that are engaged in finance. I mentioned financial technology. We also have classes in the global financial system, in monetary policy. Next door at the law school, we have students who take a class that I used to teach in financial regulation and is now being taught by a colleague of mine recently retired from a major New York law firm, and who's taken over my class. We have international financial transactions, we have lots of courses also at the business school and at the College of Engineering. A second, a big way that students can get involved is by being hired as research assistance in the Center on Finance, Law and Policy. This year, for example, we hired 28 research assistants to work with us in our program. So it's a huge opportunity. You have a chance to work on interesting research projects, you have a chance to build really life-long relationships with people who are interested in these areas and can serve as mentors to you throughout your career.

And you develop new ways of thinking about solving problems. I think it's been wonderful, and I stay in touch with the students that have been our research assistance, and they're off in the world doing, right now, really amazing things. It's great to hear from all of them and stay in touch over time, and to see what they've been up to. Really accomplishing phenomenal things at non-profits, at the Treasury, at the FDIC, at the Federal Reserve, at non-profits around the country, and at major financial institutions. So it's phenomenal to see where our students have gone. A third aspect of student involvement that I think is really fun is you get to see behind the curtain. In part because of the connections that myself and others in the program have, you get a chance to talk to policy makers directly.

I remember last year I was working on a book chapter for a book that former Treasury Secretary, Tim Geithner, and Fed Chair, Ben Bernanke, and former Treasury Secretary, Paulson, were co-editing. And my research assistants on the book got to sit with me as we got edits on our chapter from Tim Geithner over the phone, and that was really a fun experience for the research assistants. We've had a terrific range of speakers that people have had a chance to connect with directly. I mentioned Tim Geithner, he's been a speaker here at the university for us. Rich Cordray, the former Head of the Consumer Financial Protection Bureau, has been a speaker. We've had MacArthur genius [16:21] ____ come participate. Bob Schiller, a Nobel Prize-winning economist. And I could go on and on. So a great line-up of speakers.

Another thing that I think is useful for students is it gives you a chance to explore finance, financial policy as a potential career path. You get to see what people in the field have been doing, what they're up to, have a chance to really engage with them in a pretty, a direct environment in a way that gives you small group access to leading figures. And lastly, I'd say, it gives students a chance to put your skills to work right away on real world problems. A chance to help small businesses, a chance to make the financial system safer, a chance really to engage on cutting edge issues in Fintech. And so I think the practical hands-on experience is pretty extraordinary.

Let me just pause there. I know I've been going on a lot and I wanna leave plenty of time for questions or comments from all of you. We have a good group on the phone, and I'd love to hear what you're thinking about and have a chance to answer your questions. So with that, I'm gonna turn it over to Rebecca to moderate our Q and A session. Thanks so much.

Great. Thank you so much, Michael. And just wanna note, we have folks from near and far watching, from Detroit, Ann Arbor, Denver, Birmingham, DC, and even internationally in Paris. Welcome, and please remember to use the Q and A box, and if you would like to ask your question live, just indicate that with the word "live" and we'll unmute you so you can ask your question. Michael, just to get us started, you mentioned this a little bit, all of the actions being taken around COVID-19. Many people are saying that the actions we're taking now will lead to a full stop of the economy. You were intimately involved in trying to pull the economy out of the financial crisis in 2008. Can you talk a little bit about how this situation compares to then? 

Yes, thanks Rebecca. Look, I know it's scary for many people right now, both from a public health perspective and from an economic perspective, and it is. We're in extraordinary circumstances. As Rebecca mentioned, I worked in the Obama Administration trying to help get us out of the last crisis, and then reform the system so that it was less likely we'd have a financial crisis in the future. It was the hardest I've ever worked and the scariest time I've ever lived through professionally, and I learned a great deal from that experience. I would say that the current economic crisis is, unfortunately, gonna be worse before it gets better. In order to deal with this spread of COVID-19, the country has had to go really into a mode of staying at home.

And that's absolutely essential for our public health. If we don't do that, we don't have a path to slow the spread of the virus. It's staying home and staying apart physically is... Just absolutely essential to slowing the spread of the virus. At the same time, that's meant a significant slow down, a very rapid coordinated slow down in the US economy that's unprecedented. And we're seeing already significant increase in unemployment. And it's gonna get worse in the coming weeks as the number of people who need to stay home, stay home, as small businesses close down. And there's gonna just be an enormous economic slow down in these coming weeks. We need to be able to work our way through that in order to combat the virus and come out the other side. And so the Federal Reserve has started to take a wide variety of actions to ensure the stability of the financial system. You've seen the Fed step in to provide liquidity to major markets, to major banks, to money market mutual funds, and the like. They've also started to step in to support small businesses, and commercial businesses, and households.

And you're gonna see more of that now that Congress is on its way to passing a very major recovery act, a $2 trillion response to the COVID virus, that will provide additional resources, both directly and in combination with the Fed's actions to support hospitals, to support households, to increase unemployment insurance, to provide cash directly to people, to support small businesses, to support our rural economy. And all those steps are absolutely essential to keep us from going more deeply into a deep, deep recession. And I think, unfortunately, that we're gonna need to do even more. I think that the step that Congress took today was an important step. It's a huge step, but we're probably gonna have to come back to Congress in a couple of weeks and ask for it all over again to be able to avoid a serious, serious depression. While we're doing all that, we also of course need to deal with the underlying basic problem, which is getting everybody tested, doing all the tracing we need, and getting the hospital equipment we need so that we can keep more people safe. And until we wrap our arms around the underlying problem, we're not gonna get out of this economic crisis.

Great. Thank you so much for that question. We have David who I think is logging in from Paris. We'll try to unmute your mic so you can ask your question.

Hi. Can you hear me? 

We can hear you.

Okay. First of all, thank you for doing this, it's great. My question is about zero and low growth economics and if there's anything happening at the center with that in conjunction with community development in Detroit or elsewhere as well. I know you've done work on banking and financial equality, so that's where my question is coming from.

There's a lot of work that we're doing on financial inclusion, on banking the poor, on reaching out to low and moderate income households, a lot of research and work being done to make the financial system work better for people. We've been doing projects on expanding access to capital for low income communities. We've been doing work on trying to improve consumer ownership of one's financial data so that it's easier to, say, port your information from one bank to a next, which will increase competition and drive down costs in the banking sector, and drive down contingent or "gotcha" fees. Giving people better ownership over their data is important for consumer empowerment more generally. We've been doing a lot of work that's related to that on privacy and the need for better privacy protection, better data security, and protections for consent.

We've been doing a lot of work as well on reforms to the payment system, to reduce the cost and improve outcomes for low-income people. So, trying to think about how to make it easier for people to get paid, to get paid instantly, instead of having to wait to cash a check or, even worse, if they don't have a bank account to go to an expensive check casher. So, efforts to improve the payment system using technology and reform of regulation could make a big difference in reducing costs for low-income people and improving their outcomes. We've also been doing a lot of work on financial health and savings behavior and budgeting policy. The work in this area is really important to me, and it's been a core focus of my professional life for really 25 years. I'd love to get more students involved in helping us on that. Thank you for the question.

Thank you. Thanks, David, for your question. We have about five minutes left. Michael, you've studied and written about minority entrepreneurship. Can you say a little bit more about how that work informed your work co-founding the Detroit Neighborhood Entrepreneurs Project? 

Yeah, sure. I've come at the issue of small business development from lots of different vantage points. And I've, in my career, been especially concerned about trying to expand minority small business ownership and development. It's important in its own right, in terms of the growth and entrepreneurship and spirit in our country, and it's important in helping to close the racial wealth gap in our country, which is still quite severe.

And minority firms face lots of problems. Look, running a small business in general is tough. It's really hard to do. It's even harder to do if you're a minority owner or, in many cases, if you're a woman-owned business. You have less access to the network that is essential for skills development and for peer advice and job opportunities. And many minority-owned businesses are also working in low and moderate income communities that themselves are more cut off from access to capital and access to business opportunity. So I've been working on this, again, for about 25 years. Starting in my time at the Treasury Department in the Clinton Administration, where I was working in, starting in 1995. I've been working on both national policies and local policies to improve access to capital and access to skills and access to networks for small business owners.

Back in the Clinton days, I was working on capital initiatives and started a national program called Business Link to help connect small businesses with larger firms that can give them the access to better business opportunities. So that national level experience, I then brought into my research, I then did a lot of research on access to capital and access to small business growth. That research led to a series of papers. I then went back into the Obama Administration and put in place national policies, again, in the wake of the Great Recession, a state small business credit initiative, a $3 billion initiative to support state partnerships working with banks to support businesses in their local community.

And then coming back to Michigan after my service in government again in the Obama Administration, I came back into the work of trying to figure out how to do this on the ground. And a local foundation, The Kellogg Foundation, asked me to work with them to set up an Entrepreneurs of Color fund for the City of Detroit. And the reason that we did that is there was not enough access to capital, particularly for minority entrepreneurs in Detroit neighborhoods. And the person I worked with at The Kellogg Foundation was a former student of mine here at the University of Michigan named James Walls. And James had the concept for this. And after we set up the funding for that, we also realized that there was not really a good mechanism for providing wraparound business support to these small businesses in Detroit.

And so working with colleagues at Ross School of Business, and the Stamps School of Art & Design, and the Law School, we set up this Detroit Neighborhood Entrepreneurs Project to bring students and faculty together to support these businesses and have an opportunity for our students to learn firsthand what it takes to be a successful entrepreneur, and to work in interdisciplinary teams to solve problems. So it all came together through a very long period of time working on it.

Thank you so much. One thing that our admitted students often want from our panelists is a pitch. Oh, actually we have one more question from one of our admitted students, "Is Obama in real life as cool as he seems?"

Oh, he's a way cooler. Way cooler. He is an awesome human being, incredibly smart, incredibly kind, incredibly warm and generous. I'll just tell you, in the middle of the financial crisis, I was working one time and I couldn't... I was commuting back and forth from Ann Arbor when I was working in DC so I couldn't get to see my family as much as I wanted to for over two years. And in the middle of the financial crisis, President Obama stopped and wrote a beautiful little note to my children to thank them for my service. So he's just a delightful human being, super smart, and just a great guy.

Okay. Michael, one thing we wanna have you do at the very end, we'd love if you could make a pitch to our admitted students, why should they come to the Ford School as opposed to anywhere else? 

Well, I'll say a couple of things. First of all, I love this institution, I really do. It's a really warm and supportive community. It is gonna give you incredible rigorous analytic training, great training on written and verbal communication, great leadership skills. The basic foundation is a warm community, an amazing educational opportunity. And lastly, I'll say it really is a special place in terms of collaboration. Both the collaboration inside the Ford School across our research centers and faculty, students and staff, and then collaboration across the University of Michigan. Which really has a breadth of excellence that is humbling to me. More than 100 programs in the top 10 in the country, and very easy ways for us to connect and collaborate across campus. So if you're interested in expanding your mind all the time, learning something new every day, that's what I get to do every day and I welcome you joining us in doing the same.

Great. Thank you so much. And I wanna thank all of the participants on today's webinar. In the chat, there are links to sign up for the CFLP email list and to follow CFLP and Dean Barr on Twitter. Just another reminder, on April 3rd, we'll host our virtual Spring Preview and we hope you will join us for those exciting panels. Please RSVP on the Spring Preview web page. And of course we hope to see you in Ann Arbor this fall. Go Blue.

Take care everybody, and Go Blue.