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Anne Auer
Kelley School of Business

George Vlahakis
University Communications

Last modified: Friday, September 26, 2008

Indiana's congressional delegation seeks Kelley School’s expertise on proposed federal buyout

Sept. 26, 2008

BLOOMINGTON, Ind. -- Five finance professors from Indiana University's Kelley School of Business today (Sept. 26) advised the Indiana congressional delegation on the proposed federal buyout, based on their professional expertise in finance and economics.

Kelley School of Business Graduate and Executive Education Center

Kelley School of Business

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The Kelley School's professors, along with faculty members from Purdue, Notre Dame and Ball State universities, spoke with Indiana Congressmen Steve Buyer, Baron Hill, Mike Pence, Dan Burton and Mark Souder.

Kelley's professors discussed the urgency of the situation, the likelihood that the crisis could deteriorate further without government intervention and the potential severity of the credit crunch that might follow. They also discussed the pros and cons of the current Treasury proposal, including the importance of price discovery regarding the opaque assets held by financial institutions in the form of complicated mortgage-backed securities.

They advised that one way to provide price discovery is through a "reverse auction" process, with the government asking for offers from sellers of mortgage-backed assets. The government also could set up several different funds that would compete with each other to purchase the securities. By establishing the market price for the securities, private capital should also be attracted to the market for these securities.

The finance professors who spoke to the congressmen included Charles Trzcinka, Cozad Professor of Finance and chair of the department; Kenneth Carow, associate finance professor and co-director of the Kelley Direct American Banking Program; Jeffrey Fisher, Dunn Professor of Real Estate and director of the Benecki Center for Real Estate Studies; Robert Jennings, Summerville Professor of Finance; and Gregory Udell, Chase Chair of Banking and Finance.

The Kelley School's finance and economic experts are available to the media for comment on the current news from Wall Street and Washington, D.C. To arrange an interview with the professors mentioned in this release, please contact Lura Forcum at 812-856-1232 (office) 773-505-2146 (cell) or; or George Vlahakis at 812-855-0846 (office), 812-345-1500 (cell) or