Dear COR colleagues,

***Friday, January 18, 2019, 12-1:30pm, SBSG 1321

Erin Lockwood, Assistant Professor of Political Science, UCI

Discussants: Professor Bill Maurer (Social Sciences), Professor David Min (Law)

Title: Regulating Risk: Explaining the Unchecked Growth of Financial Derivatives

Abstract: This paper begins from the question of how the market for financial derivatives was allowed to grow as large as it did on the eve of the crisis in the absence of public regulation. The answer, I contend, can be found in the history of how derivatives markets evolved in close relationship with changing regulatory views of risk: what it is, who are the legitimate bearers of risk, and which actors deserve public protection from downside risk. Drawing on public regulatory documents, speeches, and testimony about derivatives from the early 20th century to the early 21st century, I trace the process through which derivatives came to be seen as legitimate financial products and the derivatives market as capable of self-regulation. The resulting analytical narrative shows that regulatory views of risk change in response to financial innovation, shifts in beliefs about the appropriate relationship between states and financial markets, and financial crisis. Regulatory understandings of risk have shaped how regulators have interpreted and regulated derivatives: financial innovations, which commodify risk itself. This analysis has important implications for understanding the regulatory response to the 2008 financial crisis and directs our attention to the conditions of possibility for future, potentially more effective, change in financial governance.

Please RSVP to cor@uci.edu by January 11 to receive the paper to read before the workshop.

Light lunch will be provided.

Best wishes,

Nina Bandelj and Melissa Mazmanian
COR Co-Directors