The Duke Project: Law students piece together solutions to the global financial crisis

April 6, 2009Duke Law News

April 6, 2009 — “The Duke Project” continues its analysis of the global financial crisis April 8 with a panel discussion on the role of credit-rating agencies and fair value accounting in the crisis and suggestions for reforms and regulatory solutions going forward.

The free, public event begins at 6:00 p.m. in Room 3037 of Duke Law School, located at the corner of Science Drive and Towerview Road on Duke’s West Campus. Parking is available at the Bryan Center.

“Credit-rating agencies such as Moody's, S&P, and Fitch played a central role in the crisis,” said Visiting Professor of the Practice of Law Bill Brown ’80 who is organizing “The Duke Project” series. “They gave their highest ratings to billions of dollars of securities that deteriorated so badly that they are now referred to as ‘toxic assets.’ These assets are weighing down our financial system so heavily that banks are not lending. One of the government's highest priorities is to remove them from the banks that hold them.

“Some feel that the problems with these and other illiquid assets are being exacerbated by "fair value accounting" rules that were recently adopted,” he added. “Some of the rules are being reversed.”

Offering their insight on fair value accounting rules and the credit-rating agencies will be Randall Roy, branch chief of the U.S. Securities and Exchange Commission’s Divison of Market Regulation, Jerome Fons, formerly of Moody’s, Donald Lampe ’82 of Womble Carlyle Sandridge & Rice, Katherine Schipper, Thomas F. Keller Professor of Accounting at Duke University, and James Cox, Duke’s Brainerd Currie Professor of Law.

Emily Johnson ’10, Jason Pear ’09, and John Duffy ’09 have focused research papers on related issues; Phillipp Cirkel LLM ’09 has written about the crisis from the European Union and German perspectives.

The Duke Project is a class project with ambitious real-world goals. Over a nine-week period, students in Brown’s class on “Legal, Accounting, and Business Responses to the Subprime Crisis” are publicly unveiling their solutions to specific aspects of the global financial meltdown.

Throughout the fall semester of his yearlong class, Brown and his students undertook a forensic analysis of the origins and contagion of the financial crisis. Working in teams, students are developing nine papers that propose approaches to specific domestic and international challenges raised by the crisis, such as economic stimulus, moral hazard, consumer debt, accounting rules, and the role of rating agencies. Each of the papers will form one chapter of a book to be published at the end of the semester.

Brown joined the faculty after serving in leadership positions at Goldman Sachs & Co, AIG, and Morgan Stanley where he specialized in currency and fixed-income markets. He says his students have approached key economic challenges with creativity and insight. “This could be the most important set of issues they encounter in their lifetimes — it certainly is the most important issue for the next decade,” he says. “They really have wrapped their arms around this and understand it in ways that many top policymakers don’t.”

For more information contact Frances Presma at (919) 613-7248 or presma@law.duke.edu.
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