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Booth in the News

Booth in the News, Winter 2010, Vol. 3

(Covering January 26 to February 8, 2010)

Here are highlights of the latest Chicago Booth news coverage. The digest below represents only a portion of recent coverage.

Section 1: News coverage of Chicago Booth.

  • FINANCIAL TIMES. The new academic partnership between Chicago Booth and Deutsche Bank was featured in an article headlined “Deutsche Bank funds Chicago Booth events.” The bank will support and expand education related to risk management and financial regulation. As part of the relationship, Deutsche Bank has funded the creation of a new speakers series for Booth MBA students as well as a new summer conference for Ph.D. students. The article was published February 1. Read more

  • INVESTMENT DEALERS’ DIGEST. The new Chicago Booth/Deutsche Bank partnership (see item above) was featured February 2. “We create and disseminate knowledge and our partnership with Deutsche allows us to do both,” said Stacey Kole, deputy dean for the full-time M.B.A. program. “The intent is to push students to think harder about the interaction between markets and regulation,” she said. The inaugural event of the partnership, the “Risk and Regulation in Financial Markets” speaker series, featured a presentation by Professor Douglas Diamond, the article said.
  • FORBES. Chicago Booth was one of the schools mentioned in an article headlined “How Creative M.B.A. Programs Are Overcoming Bad Times.” There has been a “flight to quality” among applicants to business school, the article said. “In the U.S. that’s been good news for leaders like Wharton, Stanford, and especially for Harvard and Chicago Booth, both of which recruited their largest classes ever,” the February 5 article said. “Students have begun playing it safe by opting for major brand names.”

Section 2: News coverage quoting Chicago Booth faculty.

  • FINANCIAL TIMES. Professor Raghuram Rajan wrote an op-ed titled “A better way to reduce financial sector risk,” January 25. “Instead of imposing a blanket ban on institutions growing beyond a certain size, regulators should use more subtle mechanisms such as prohibiting mergers of large banks or encouraging the break-up of large banks that seem to have a propensity for getting into trouble,” he wrote. Professor Rajan’s forthcoming book, “Fault Lines,” was mentioned at the end of the op-ed. Read more
  • FINANCIAL TIMES. Professor Luigi Zingales wrote an op-ed titled “How to make a distressed bank raise equity,” February 8. Regulators should be required to make a margin call any time the credit default swaps price of bank’s debt exceeds a threshold, he wrote in the article, co-authored with Harvard professor Oliver Hart. Read more
  • THE GUARDIAN (London). Professor Richard Thaler wrote a commentary titled “We can make you behave: Our plan is to embed the insights gleaned from behavioral economics throughout government.” He co-wrote the January 29 article with George Osborne, a member of the British Parliament and shadow chancellor. Read more
  • THE WALL STREET JOURNAL. Professor John Cochrane’s recent paper “Lessons from the Financial Crisis,” was featured in the Real Time Economics blog February 1. He argues that panic was the hallmark of the crisis. “The signature event of this financial crisis was the ‘run,’ ‘panic,’ ‘flight to quality,’ or whatever you choose to call it, that started in late September of 2008 and receded over the winter,” he said. The article includes a link to Professor Cochrane’s four-page paper on the crisis, published in the Winter issue of Regulation. Read more
  • CNBC. Professor Randall Kroszner said “it is a reasonable horizon” to expect the Federal Reserve Board to start communicating its intent to tighten monetary policy before the end of this year. But during an appearance as guest host of the Squawk Box program February 8 he said the current data and forecasts for the data indicate that the Fed has “a fair amount of time” before it has to take that step. Professor Kroszner served as a Fed governor from 2006 to 2009. Read more
  • THE WALL STREET JOURNAL. Professor Raghuram Rajan was quoted in an article headlined “At Davos, Experts See Global Dip Ahead.” During his presentation at the annual meeting of the World Economic Forum, Professor Rajan said “We have moved from a period of great economic uncertainty to a period of great political uncertainty.” The combination of 10 percent unemployment in the U.S. and 10 percent economic growth in China could prove politically toxic, as U.S. politicians might resort to “populism” to protectionist measures. The article was published January 27. Read more
    Professor Richard Thaler also spoke at the Davos event. Here is a New York Times article about his presentation. Read more
  • TIME MAGAZINE. Professor Raghuram was quoted in an article headlined “The Chill in Davos,” published in the issue dated February 4. Consumers in developing countries are not yet ready to carry the load the American consumer did during other periods of global economic turmoil, such as after the Asian financial crisis of 1997, the article said. “My sense is that what we’ve had is a situation of excess demand being created by the industrial countries, and now the hot potato is being shifted to the emerging markets,” Professor Rajan said. “Historically, they’ve never managed it well.” Read more
    More coverage of Professor Rajan’s remarks at Davos can be found in this New York Times story published January 29. Read more
  • NEWSWEEK. Professor Richard Thaler was quoted in an article headlined “May the Best Theory Win: How economists are competing to make sense of our failed financial system,” published January 22. “We know that efficient-markets theory isn’t completely right, but neither is anything else,” he said. Read more
  • CHICAGO TRIBUNE. Professor Douglas Diamond’s recommendations to avert future banking meltdowns were featured in an editorial published January 28. While President Obama proposed baring most banks from owning or investing in private equity companies and hedge funds, Professor Diamond said that isn’t necessarily the best approach. “(Professor Diamond) thinks higher capital requirements would better serve the same purpose,” the editorial said. “But he agrees that ‘it makes some sense to have some limit on extreme risks if you have a government safety net.’” Read more
  • CNN. Professor Luigi Zingales discussed under what circumstances it makes sense for a homeowner to walk away from an underwater mortgage. Homeowners with non-recourse mortgages who owe significantly more than their home is worth should consider defaulting on the loan, he said during a live interview February 1. But only a small fraction of homeowners have non-recourse mortgages, he said, noting that such loans prohibit a lender from going after a borrower’s future earnings.
  • THE WASHINGTON POST. Professor Robert Fogel was quoted in an article headlined “A growth lesson from China.” He projects that by 2040 China’s GDP will be $123 trillion, or three times the entire world’s economic output in 2000. He says China’s per capita income will be more than double what is forecast for the European Union. Professor Fogel says there are many reasons for this growth, but he especially stresses “the enormous investment China is making in education.” The article was published February 4. Read more
  • THE WALL STREET JOURNAL. Professor Luigi Zingales was quoted in an article containing results of the latest Chicago Booth/Kellogg School Financial Trust Index. “People still view government intervention favorably on actions such as helping out homeowners, but they have moved away from wanting the government to be involved in running major institutions,” Professor Zingales said in the January 26 article. The latest findings also show that Americans’ trust in national banks, compared to smaller community banks, is slow to recovery from the depths of the financial crisis. Read more
    The New York Times also published an article about the findings. Read more
  • THE GLOBE AND MAIL (Toronto). Professor John Cochrane was featured extensively in an article published January 26, headlined “Danger in debt, stagflation: Economist John Cochrane spells out his biggest concerns about the U.S. economy.”
  • THE TELEGRAPH (London). Research by Associate Professors Atif Mian and Amir Sufi and Assistant Professor Francesco Trebbi was featured in an article headlined “How to buy friends and influence people.” They found that, on a series of measures designed to clean up after the financial crisis, those U.S. politicians who received greater contributions from the financial services industry were statistically more likely to vote for legislation that transferred wealth from taxpayers to bankers. The article was published January 28. Read more
  • CNBC-TV 18 INDIA. Professor Raghuram Rajan discussed the global economy during an interview broadcast January 29. “It’s going to be a recovery that doesn’t feel like a recovery,” he said. “It’s going to feel very painful.” In the U.S. “the focus has to be on how to create jobs,” Professor Rajan said.
  • THE NEW YORK TIMES. Research by Professor Marianne Bertrand and two co-authors was featured on the newspaper’s Freakonomics website January 28. The article featured questions and answers about Professor Bertrand’s paper “Dynamics of the Gender Gap for Young Professionals in the Corporate and Financial Sectors.” Read more
  • XINHUA NEWS AGENCY (China). Professor Raghuram Rajan said the BRIC nations, Brazil, Russia, India and China, need to expand their common interests and jointly push for the establishment of a new order, according to an article published February 5. “As the links between the BRIC countries are building up, and the foreign direct investment that flows into each other increases, you will find an increasing willingness to see a commonality of economic purposes between these countries, he said during remarks in Moscow at the 2010 Russia Forum.
  • FOX BUSINESS NETWORK. Professor John Cochrane did a live interview January 30 during which he discussed how to lower the unemployment rate. “The best way to create jobs is for the government to get out of the way,” he said. Changing the tax code isn’t the answer, he said. On another topic, Professor Cochrane said unless we are able to reduce the federal budget deficit, inflation could result.
  • THE NEW YORK TIMES. A proposal by Professor Luigi Zingales to reduce mortgage principal was featured in an article February 2. Any underwater homeowner who lives in a ZIP code where home prices have fallen at least 20 percent would be eligible for a loan modification, according to his proposal. Read more
  • ASSOCIATED PRESS. Clinical Professor James Schrager was quoted in an article about the appointment of Ed Whitacre Jr. as permanent CEO of General Motors from his previous post as interim CEO. Professor Schrager praised the move, saying he’s impressed with Whitacre’s desire to shake up GM’s culture of cumbersome committees that slowed decision making. “All layers of management at GM have been problematical,” he said in the January 25 article.
  • THE WALL STREET JOURNAL. Recent research by Professor Eugene Fama was featured in an article headlined “With Fund Managers, Past Is No Predictor for Future.” Professor Fama’s study found that very few people can consistently beat the financial markets. The article was published January 31. Read more
  • CHICAGO TRIBUNE. Professor Steven Kaplan was quoted in an article about Kraft’s purchase of Cadbury PLC and the coming steps to integrate the two companies. In any big merger, “uncertainty is a killer,” he said. “To an employee, uncertainty breeds an attitude of “I don’t know what’s going on; I’m looking for another job.” And who’s looking? “The best people, and they can get another job,” Professor Kaplan said in the February 7 article. Read more
  • FORTUNE. Professor John Cochrane’s proposal for an innovative product called “Health Status Insurance” was featured in an article headlined “Health care’s new hidden danger.” Under Professor Cochrane’s plan, by paying a small additional premium, patients could transfer to a new insurer even if that carrier demanded a higher premium. The old insurer would cover the difference. The article was published February 2. Read more
  • BLOOMBERG NEWS. Professor Steven Kaplan was one of the experts quoted in an article headlined “Citigroup Said to Plan Sale of $10 Billion Private-Equity Unit,” published February 1. “Citi has been going in and out these different investing vehicles, both private equity and hedge funds,” he said. “It’s been a game of musical chairs.” Read more
  • BBC TELEVISION. Professor Sanjay Dhar discussed the marketing implications of Kraft’s takeover of Cadbury during an interview at the Harper Center broadcast February 1. The interview aired on the Inside Out program on the BBC station in Birmingham, England, where Cadbury is headquartered.
  • CHICAGO TRIBUNE. Professor Randall Kroszner was quoted in an article about the outlook for the economy and the stock market. It will be difficult for the Federal Reserve to dissect real growth from government-policy-induced growth as it tries to pick the point at which it can raise interest rates, Professor Kroszner said in the January 27 article. “We do seem to have a recovery under way, but it must be naturally generated. Given the size of policy, it’s more difficult to determine if it’s self- sustaining.” Read more
  • CHICAGO TRIBUNE. Assistant Professor Patricia Cortes was quoted in an article about whether immigrants hurt the economic prospects of Americans. Long-term growth and prosperity depend on an expanding population, the January 27 article said. “You do need labor. You need to expand the population,” Professor Cortes said. Read more
  • MARKETWATCH. Professor Steven Kaplan was quoted in an article headlined “Obama’s big bank size limit proposal could help small rivals.” A limit on the size of financial institutions would trickle down to hurt consumers seeking bank loans, in the long run, he said, adding that limits and other restrictions are over-kill. “This proposal is all about politics and not about substance,” Professor Kaplan said in the February 1 article. Read more
  • REUTERS. Professor Steven Kaplan was quoted in an article about the threat of higher taxes being imposed on private equity firms. “In its favor it will pick up some taxes,” he said. “On the other hand, it will hit private equity and particularly venture capital firms, and … they’re not the bad guys.” The article was published February 7.
  • CRAIN’S CHICAGO BUSINESS. Professor John Birge was quoted in an article headlined “Utilities stick customers with new charges for others’ unpaid bills,” published February 8. “How do (regulators) know whether the utilities are making a good-faith effort to collect?” he said. “That seems a difficult thing to monitor.” Read more
  • CRAIN’S CHICAGO BUSINESS. Clinical Professor Ellen Rudnick was quoted in an article headlined “EBay, Amazon offer route to new career for jobless Americans,” published February 8. “These sites represent a lower-cost way of accessing customers and provide a technology infrastructure for a much lower cost than doing it yourself,” she said, but “there are a lot of people trying to sell on these sites, so differentiating your product or service is a challenge.” Read more
  • LEADERSHIP MAGAZINE (Austria). New marketing research by Associate Professor Aparna Labroo was featured in the January/February issue of this magazine. To combat the stress among holiday shoppers, marketers must ramp up their advertising to elicit more positive emotions, she found. By discerning the negative emotions of consumers, advertisers can maximize their ad strategy by crafting messages to ease negative feelings and create a more positive mindset.

Section 3: Chicago Booth students and alumni in the news.

  • FORTUNE. A feature article about Jon Winkelried, MBA ’82, headlined “The man who walked away from Goldman Sachs,” was published January 26. “Twenty-seven years and $500 million or so in personal net worth later, Jon Winkelried would walk away from Goldman Sachs not long after being anointed as a potential successor to CEO Lloyd Blankfein,” the article said. Read more
  • THE TIMES OF LONDON. A feature article about Eric Gleacher, MBA ‘67 was published February 6. He is chairman of Broadpoint Gleacher Securities. When he enrolled at Chicago Booth “I didn’t know about business,” he said, adding that he thought investment banking might suit him because it combined analytical rigor with talking to people. “It turned out I was right,” he said. “Calling Mr. Gleacher a ‘successful investment banker’ is understating his place in Wall Street’s pantheon,” the article said.
  • BLOOMBERG BUSINESSWEEK. Ellyn Charters, MBA ’10 wrote an MBA Journal column headlined “Make the Most of Year Two,” published February 5. “We come to second year with a battle wound or two and the knowledge that even though things might not happen the way we imagined, in the end it all works out,” she wrote. Read more
  • BLOOMBERG BUSINESSWEEK. Urshala Brown-Bowles, MBA ’11 wrote an MBA Journal column headlined “Taking Business School in Stride,” published January 28. “Nothing prepares you for business school like the application process,” she wrote. Read more
  • LE FIGARO (Paris). Jonathan Bensamoun, MBA ’10 was quoted in an article about the benefits of enrolling in business school during an economic downturn. “Having an MBA is still a career booster,” he said. “The opportunity to enter the employment market at the beginning of a growth cycle in my opinion is critical. And to be part of a prestigious MBA program also offers an incredible academic opportunity.” The article was published January 18.
  • ON WALL STREET. Raymond Harris, MBA ’80 was featured in the “Life Stories” column February 1. He is vice chairman of global wealth management at Morgan Stanley. He was steered toward the financial services industry while attending Chicago Booth. ”Everything came together for me” during his time at business school, he said.
  • SACRAMENTO BUSINESS JOURNAL. Matthew Janopaul, MBA ’99 and Girish Satya, MBA ’08 purchased Italian restaurant chain Pasta Pomodoro Inc. of San Francisco, according to an article published February 2. The chain has 23 locations, many of them in San Francisco. Janopaul is the new CEO while Satya is the company’s new CFO, the article said.
  • THE DALLAS MORNING NEWS. Dumas Simeus, MBA ’72 was featured in an article headlined “Southlake businessman keeps Haitians’ plight in public eye.” Simeus, a 2005 Haitian presidential candidate, is leading fundraising efforts for Haiti. Read more
  • THE HEDGE FUND JOURNAL. Erik Senko, MBA ’02, joined Omni Global Fund Asia as head of trading, according to an article published January 31. Previously he was a senior trader for Centarus Capital Hong Kong Limited.