Thank you, Claudia, and thanks to the American Economic Association and the American Finance Association for the opportunity to speak to you on a topic of growing interest to our profession and of great importance to understanding the causes and implications of the financial crisis.1 Everyone here today, I'm sure, is familiar with the tumultuous events that introduced many Americans to the concept of systemic risk. To recap briefly, losses arising from leveraged investments caused a few important, but perhaps not essential, financial institutions to fail. At first, the damage appeared to be contained, but the ... (full story)