One year ago Sept. 15, the global financial services firm Lehman Brothers rocked the financial industry and economy by filing the largest bankruptcy in United States history.

How well have the Federal Reserve and other agencies, government leaders and the financial industry responded to the shock waves generated from this event over the past 12 months? And where is the economy heading now? DePaul University faculty experts are available to discuss these issues with the media. They include:

Thomas Mondschean, professor of economics, (312) 362-5210, tmondsch@depaul.edu. He can discuss the money supply, financial institutions, bank regulation and international economics in the wake of Lehman’s downfall. Mondschean has served as an economic research consultant with the Federal Reserve Bank of Chicago.

"Overall, I think a great deal has been accomplished in a short time," Mondschean said.  "Commercial and investment banks have moved swiftly to write down poorly performing assets, and the government has used the TARP (Troubled Asset Relief Program) money to help them maintain their capital adequacy while doing so.  But there is still more work to do, especially with respect to commercial real estate loans and residential mortgage loans that have yet to reset to higher interest rates.

"I think there will be a banking bill coming to the President Obama’s desk in the next year, but unfortunately it will not be a really strong reform bill," he said.  "Restructuring individual mortgage loans remains a huge challenge, and there will continue to be many bank failures, especially if the commercial real estate sector continues to lose money at the rate it currently is doing."

What about the economy as a whole? "The economy is still in recession, though there are some signs of improvement," Mondschean said. "The household sector, while improving, still has very high debt-to-income and debt-to-asset ratios relative to our historical experience.  Debt levels have gone down over the past year, but not enough to trigger a real recovery in consumer expenditures, which represent about 70 percent of the Gross Domestic Product.  Income growth remains very weak, adjusted for inflation, so there is little hope of an immediate turnaround in consumption.  Given falling housing and stock prices, the net worth of households has taken a huge hit over the past two years and banks have tightened consumer credit.  There really is no place for consumers to go except to increase saving to rebuild their balance sheets, which they are currently doing.

"Looking forward, consumption expenditures will continue to be weak, and I expect little if any real growth in the next year," Mondschean concluded.

Elijah Brewer III, professor of finance, (312) 362-5151, ebreweri@depaul.edu.  He has expertise in monetary policy and banking. Brewer has served as a consultant in the economic research department of the Federal Reserve Bank of Chicago.

"Economic data suggest that the United States economy is improving and is likely to show a modest growth in the current quarter, but risks remain," according to Brewer. "The improvements in the economy are unlikely to spillover to the job market until sometime next year.

Financial markets and institutions have regained some level of stability as a result of the substantial amount of intervention by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and United States Treasury. One indication of this is current discussions that the FDIC is having with market participants on how it can effectively phase out the Debt Guarantee Program, a component of the FDIC’s Temporary Liquidity Guarantee Program to stabilize the financial system during last year’s turmoil.  Many financial institutions are now able to issue debt relatively cheaply with the government guarantee."

Rebel A. Cole, associate professor of finance, (312) 933-0584, rcole@depaul.edu. He served as a financial economist for the Federal Reserve Board from 1991 to 1998. Cole can discuss financial institutions, bank failures and takeovers, the credit market meltdown and the bailout.

"Ultimately, (Federal Reserve President Ben) Bernanke and the Fed must take responsibility for the financial crisis. Had the Fed performed its duty as ‘lender of last resort’ last year when Lehman Brothers came calling, the financial panic of September 2008 would not have occurred," Cole said.