Caballero Proposes Plan for Reducing Financial Fear    

Ricardo Caballero, Ford International Professor of Economics
Head, Department of Economics 
MIT School of Humanities, Arts, and Social Sciences 

In the fall of 2008 a worldwide panic was unfolding: Financial markets froze after the collapse of the investment bank Lehman Brothers, leaving businesses without lenders as the economy drastically slowed. How can we stave off such fear-enhanced episodes in the future? Ricardo Caballero, MIT's Ford International Professor of Economics, offers a distinctive solution: Government-issued investment insurance for banks.