Home / Public Purpose Finance: Fair Housing and Climate Mitigation
It is a little appreciated fact that one of the central goals of U.S. financial law is to channel credit into activities and sectors deemed vital for the public interest. Such "public purpose finance" supports private borrowers but only insofar as their projects promote publicly determined goals. With over one quarter of the U.S. bond market some $10 trillion the political stakes of public purpose finance are enormous though they are rarely discussed. Our seminar will be organized in three parts. The introductory sessions will provide students with all the necessary background by familiarizing them with basic financial concepts and institutions (E.g., what is a bond? How do banks work? How does one measure economic and racial inequality?). Building on these sessions, we will then explore two case studies. The first case study concerns housing policy in the U.S., which accounts for the lion's share of public purpose finance today. The institutions and legislation we will discuss include the Government State Enterprises (Fannie Mae, Freddie Mac, and FHLB), the Community Reinvest-ment Act, and Community Development Financial Institutions. We will study the considerable achievements of this system in expanding access to credit for homeownership, but also its serious shortcomings with respect to racial and economic inequality. Students will be encouraged to explore these issues in the context of housing policy here in New Orleans. The second case study concerns "climate finance," which addresses the large in-vestments in renewable energy that are necessary to transition into a low carbon economy. In distinc-tion from housing finance, climate finance in the U.S. is still very much in its infancy. We will build on our discussion of housing to examine the design choices that are available for us today with respect to climate. Current initiatives in China and Europe will provide additional examples. No background in finance or economics is required and students from all backgrounds are encouraged to register to the seminar. (3 Credits)
Fall 2018
Nadav Orian Peer
Seminars