Can We Stop Another Run on the Banks?

No, Says Gary B. Gorton, Unless We Get What Causes Financial Crises

In Squaring Off, Zócalo invites authors into the public square to answer five questions about the essence of their books. For this round, we pose questions to Gary B. Gorton, the Frederick Frank Class of 1954 Professor of Management and Finance at the Yale School of Management and author of Misunderstanding Financial Crises: Why We Don’t See Them Coming.

Gorton argues that most post-mortems of the recent financial crisis failed to recognize the culpability of what he calls “the shadow banking system” and new-fangled forms of debt. He believes these innovations are …