Oh, How the Mighty Have Fallen: The Bank Failures and Near Failures That Started America’s Greatest Financial Panics

This is my presidential address to the Economic History Association that was delivered in September 2020. It examines the failures or in some cases near-failures, of financial institutions that started the 12 most severe peacetime financial panics in the United States, beginning with the Panic of 18...

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Bibliographic Details
Published in:NBER Working Paper Series 2021-03
Main Author: Rockoff, Hugh
Format: Article
Language:English
Subjects:
Bank failures
Banking industry
Economic history
Economic theory
Reputations
Shadow banking
Online Access:Get full text
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Summary:This is my presidential address to the Economic History Association that was delivered in September 2020. It examines the failures or in some cases near-failures, of financial institutions that started the 12 most severe peacetime financial panics in the United States, beginning with the Panic of 1819 and ending with the Panic of 2008. The following generalizations were true in most cases, although not in all. (1) Panics were triggered by a short series of failures or near-failures; (2) many of the failing institutions were what we would now call shadow banks; (3) typically, the source of trouble was an excessive investment in real estate; and (4) typically, they had outstanding reputations for trustworthiness, prudence, and financial acumen—before they failed. It appears that in these respects the Panic of 2008 was an old-school panic.
ISSN:0898-2937
DOI:10.3386/w28577