Chicago Booth in the News; Winter 2009; Vol. 4

(Covering February 17 to March 3, 2009)

Here are highlights of the latest Chicago Booth news coverage. The digest below represents only a portion of recent coverage. To receive a copy of an article cited, please contact Allan Friedman, executive director of communications, at 773-702-9232.

Section 1: News coverage about Chicago Booth
Section 2: News coverage quoting Chicago Booth faculty
Section 3: Chicago Booth students and alumni in the news

Section 1: News coverage about Chicago Booth

THE WALL STREET JOURNAL. Chicago Booth’s U.S. Monetary Policy Forum made news in late February. Articles about the conference appeared in The Wall Street Journal, Reuters, Bloomberg and elsewhere. A front page story in The Wall Street Journal February 28 quoted luncheon speaker Christian Romer, chairman of President Obama’s Council of Economic Advisers. Other stories quoted the presidents of four Federal Reserve Banks who spoke at the event. Seventeen reporters attended, including journalists from the Economist, The New York Times, The Wall Street Journal, Washington Post and Japan’s Nikkei. The event was conducted by the Chicago Booth Initiative on Global Markets.
ILLINOIS MEETINGS AND EVENTS MAGAZINE. The Chicago Booth Gleacher Center was named the best conference center in Illinois, according to the Winter issue of this magazine. “Our goal is to provide space and a level of service that rivals Chicago’s best hotels,” Colin Green, director of the Gleacher Conference Center, said in an article about the award posted on PRWeb February 19.
NATIONAL POST (Canada). An article headlined “Defining executive education; it began in 1943,” featured Chicago Booth as the school that pioneered the executive MBA degree. These days, the EMBA is an opportunity for upwardly mobile employees to signal their interest in assuming greater responsibility, and to distinguish themselves by earning a respected credential that delivers an immediate return on investment to their organization, the February 24 article said.

Section 2: News coverage quoting Chicago Booth faculty

CHICAGO TRIBUNE. Professor Steven Kaplan published an op-ed titled “Restricting bank executives’ pay would stall recovery.” The restrictions would be counterproductive, he said. “Banks would avoid accepting government assistance unless the situation is grave. Only the worst firms would accept government help. Many executives would leave the ‘bailed-out’ banks for jobs that pay more, and the best employees would leave the troubled firms at exactly the wrong time.” The op-ed was published February 17. An editorial in the newspaper on the same day called Professor Kaplan’s commentary “a good analysis of the perverse economic impact of these (pay) caps.” Read more>
FORBES. Professor Christian Leuz published an op-ed on the dangers of over-regulation. Aside from being costly, excessive regulation can “stifle financial innovation, reduce the flow of credit to worthy firms and consumers, and impede economic growth,” he wrote. More regulatory scrutiny also could worsen the economic downturn, according to Professor Leuz. The op-ed was published February 9. Read more>
NATIONAL PUBLIC RADIO. Professor Raghuram Rajan discussed attempts to stabilize the financial system during an appearance on Morning Edition, February 18. He responded to the question: Should the government buy up sick banks so we don’t have to keep dumping money into them? “There is this question of nationalization that keeps coming up,” he said. The complete 4-1/2 minute interview can he heard at Read more>
NATIONAL PUBLIC RADIO. Professor Reid Hastie appeared on the Hear and Now program February 19, offering advice on how to conduct productive meetings. He recommended that meeting leaders pre-assign homework and be graded for the effectiveness of the meeting afterward. The segment “No More Bad Meetings,” can be heard at Listen to >
NATIONAL PUBLIC RADIO. Assistant Professor Amir Sufi discussed President Obama’s plan to reduce home foreclosures during an appearance on Planet Money. The 17-minute interview, recorded February 20, can be heard at Listen to >
DOW JONES NEWSWIRES. An entire article devoted to new research by Professor Lubos Pastor was distributed by this global news service February 18. Seeing a decade of gains erased in a relatively short period has many investors guessing when the stock market will turn around, however hanging on for a rebound may not be the best choice, according to the research, titled “Are Stocks Really Less Volatile in the Long Run?” Professor Pastor’s research on stock returns found that equities are actually more volatile over 30-year periods than conventional wisdom teaches, because the principle of uncertainty hasn’t been given enough weight by financial advisers, the article said.
ASSOCIATED PRESS. Professor Anil Kashyap was quoted in an article headlined “Fed launches new $200B consumer credit program.” The Term Asset-Backed Securities Loan Facility (TALF) should make it easier for consumers to get loans, Professor Kashyap said. But he cautioned that the Fed’s willingness to finance some debt could distort the markets by making other debt securities that lack the government’s backing less attractive to investors. “We’d really rather the credit markets just work properly,” he said in the March 3 article.
BUSINESS WEEK. Research by Professor Luigi Zingales found that the government’s interventions in the financial markets in 2008 made people less confident in investing in the stock market, according to a March 2 article. Fully 80 percent of the 1,000 households taking part in a late-December poll said the government’s actions reduced their investing confidence, the article said.
THE WALL STREET JOURNAL. Research by Assistant Professor Amit Seru was featured in an article about President Obama’s proposal to address the home foreclosure crisis. It wasn’t clear how far the administration’s plan will go in pushing mortgage companies to rework troubled loans that have been packaged into securities and sold to investors, the article said. Professor Seru’s research found that securitized loans are being foreclosed on at a much faster rate than mortgages held by banks. The article was published February 19.
TIME MAGAZINE. Professor Richard Thaler was featured in an article headlined “Making Good Health Easy.” Good options and good incentives are not always enough to motivate people to improve their health. Sometimes they need a helpful cue about their best choice, Professor Thaler said. “Sending people a bunch of options – that they can join health clubs or Weight Watchers or something – is probably not going to work,” he said in the article published February 23. What works is making good health effortless – say, by having a nurse come into the office to administer vaccines and allowing workers to opt out if they’re not interested.
TIME MAGAZINE. Research on CEO pay by Professor Steven Kaplan and Associate Professor Joshua Rauh was featured in a story published February 19. They found that the spectacular rise in the very top incomes in the U.S. a few years ago was due largely to Wall Street-types, not corporate CEOs, the article said. “For all the outrage about the pay for corporate chief executives and their lieutenants, it didn’t account for more than a sliver of the gains,” the article said.
CHICAGO TRIBUNE. Professor Luigi Zingales said trust is a major component of the current financial crisis. His research shows deep distrust of the financial system and of the government for its handling of the crisis, a February 18 article reported. People with the strongest distrust are the most leery of stocks, he said. Overcoming that distrust is necessary for the market to begin to recover, and he puts the responsibility on the Obama administration to take decisive action, according to the article.
U.S. NEWS & WORLD REPORT. Professor Austan Goolsbee was named one of the top 25 “market movers” of 2009. “These are the people who could have the biggest impact on your portfolio in the coming year,” the magazine said. Professor Goolsbee is on academic leave while he serves as staff director and chief economist of President Obama’s Economic Recovery Advisory Board. He also is pending Senate confirmation as a member of the President’s Council of Economic Advisers. Others on the top 25 list with Professor Goolsbee include Fed Chairman Ben Bernanke, Treasury Secretary Timothy Geithner, and Lawrence Summers, director of the National Economic Council. The article was published in the March issue.
THE WALL STREET JOURNAL. Professor Richard Thaler offered advice on how consumers should spend the tax credits included in the stimulus bill. “I think the answer depends on your circumstances,” he said. “If you are carrying lots of credit card or other forms of debt I say your first priority should be to make progress on that. Call it a private bailout of the banks if you want.” The article was published February 18 on the newspaper’s Real Time Economics website.
TAIPEI TIMES (China). An op-ed by Professors Raghuram Rajan and Douglas Diamond on the U.S. banking crisis was published February 19. “Unless the regulated financial system is systematically audited, with weak entities stabilized through capital injections, asset purchases or mergers, or liquidated quickly, the overhang of distressed institutions will persist, constraining lending,” they wrote.
CRAIN’S CHICAGO BUSINESS. Professor John Birge was one of the experts quoted in an article about how manufacturing companies can survive the recession. “The survivors are going to have highly diversified customer bases, more customized products, fewer workers but more of them who are higher-skilled,” he said in the article published February 16.
BLOOMBERG NEWS. Professor Raghuram Rajan said the stress tests being conducted on about 20 of the nation’s largest banks can help fix the problems facing banks “if the tests are followed by action. What we need to clean out the system is for investors to know that there are not more crises to come,” he said in an article published February 24.
BLOOMBERG NEWS. New research by Professor Steven Davis was featured in a February 17 article headlined “LBO-Owned Companies Raise Productivity Faster, Report Concludes.” Professor Davis found that productivity increased about 9 percent in a two-year period after acquisitions by private-equity companies compared with 7 percent for other firms.
PROSPECT MAGAZINE (London). Professor Richard Thaler was chosen as one of the top three “public intellectuals of 2008,” by this magazine. Professor Thaler was picked along with Cass Sunstein, a visiting professor at the law school. “Authors of Nudge, this year’s most talked about policy tract, the buzzy duo brought behavioral economics and social psychology into the mainstream,” Prospect wrote in the January issue. General David Petraeus and Nouriel Roubini, a professor at NYU, rounded out the list.
BLOOMBERG NEWS. Professor Richard Thaler was quoted in an article about the inertia displayed by investors in 401(k) retirement accounts during the bear market. “It is what I would have predicted,” he said. Professor Thaler’s research suggests that the only time most 401(k) participants make major changes in their investment choices is when they switch jobs. In those cases, he said, they frequently make poor decisions, adding to stock holdings in rising markets and bailing out of stocks during market slumps, according to the February 24 article.
ACCOUNTANCY MAGAZINE (UK). Professor Ray Ball was one of the experts cited in an article about the major issues facing financial reporting in 2009. The debate over fair value accounting means this year could be remembered as one of death or glory for financial reporting, according to the article in the March issue. “Fair value has simply pointed out the problems in the system,” Professor Ball said.
U.S. NEWS & WORLD REPORT. Professor Richard Thaler was featured in an article headlined “6 Answers to Key 401(k) Questions.” If there’s company stock in your 401(k), it’s probably a source of worry rather than comfort, the article said. A dollar in company stock is worth less than half the value of a dollar in a mutual fund because of the lower risks posed by being diversified, Professor Thaler said in the article published February 23.
CRAIN’S CHICAGO BUSINESS. Clinical Professor Linda Ginzel was quoted in an article headlined “5 Ingredients for a Great Workplace.” Successful workplaces have transparency and are structured to hold both employees and management accountable, according to the article published March 2. Annual reviews, for example, may include comments from peers or subordinates. Transparency gives workers a sense of trust. “It provides predictability, so you don’t feel like you could have the rug pulled out from you at any moment,” Professor Ginzel said.
CHICAGO TRIBUNE. Clinical Professor Ellen Rudnick was quoted in an article on how small-business owners can benefit from having a board of advisers. “A board, in addition to oversight, can play the role of consultant and therapist,” she said. “Because these are unprecedented times, you need people you can bounce ideas off of and broaden your network for opportunities.” The article was published March 2.
THE CHRONICLE OF HIGHER EDUCATION. Research by Professor Robert Fogel on U.S. Civil War veterans from the Union Army is “one of the most elaborate and painstakingly assembled data sets in the history of social science,” according to an article published February 27. “It could, some scholars say, open up new avenues for studies of 19th century America.” Professor Fogel’s work forms the basis for the new book “Heroes and Cowards: The Social Face of War,” by Dora Costa and Matthew Kahn.
TRENDS MAGAZINE (Brussels). Professor Emeritus Marvin Zonis gave his forecast for the global political economy in 2009 during a Q&A interview published February 12th. He was interviewed in Brussels at the Chicago Booth Business Forecast event.

Section 3: Chicago Booth students an alumni in the news

THE NEW YORK TIMES. Avi Stopper, MBA ’06 was featured in an article about the rise of the online collage sports recruiting industry. He co-founded CaptainU, an online recruiting site, after sharing first place in the Chicago Booth’s Edward L. Kaplan New Venture Challenge last year, the March 1 article said.
BLOOMBERG NEWS. Jon Winkelried, MBA ’82, co-president and co-chief operating officer of Goldman Sachs Group, is retiring March 31, according to an article published February 18. He joined the firm immediately after receiving his MBA from Chicago Booth, the article said.
MINNEAPOLIS STAR TRIBUNE. Robert Mariano, MBA ’87 was profiled in an article published February 17. He is CEO of Roundy’s supermarkets, the parent company of Rainbow supermarkets which posted $3.9 billion sales in the most recent fiscal year. The article mentioned that he earned an MBA from Chicago Booth.
HER WORLD MAGAZINE (Singapore). Sarita Singh, AXP6, was featured in an article discussing the benefits of earning an MBA. “One of the biggest advantages of getting an MBA was learning from a wide diversity of people. Nobel laureates were guest lecturers and CEOs and CFOs were my course mates” at Chicago Booth, she said in the article published in the March issue.
BUSINESS WIRE. Ron Sabia, MBA ’89 was named president of Gulf Oil, according to an article distributed February 19. He continues to serve as COO of the firm, one of the Northeast’s largest wholesalers of refined petroleum products.