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Modeling Financial Networks: A Case Study of UC Davis

Student-Run Applied & Math Seminar

Speaker: Jeff Anderson, UC Davis
Location: 2112 MSB
Start time: Wed, Jan 13 2010, 12:10PM

On March 15, 2008 the United States Federal Reserve publicly announced its position to support the investment bank Bear Stearns, asserting that the bank was “too big to fail.” It proceeded to lend $85 billion to the struggling investment firm. On October 3, 2008, President Bush signed into law the Troubled Asset Relief Program (TARP) which handed out over $700 billion in emergency loans to major companies. The rhetoric utilized to gain support for TARP stressed that in a network of financial institutions, there are certain vertices that are crucial to the resiliency of the network. It was clear that for the federal government to let such vertices disappear would be a terminal blow to the larger economic network in the USA. This beckoned one of the largest deficit spending processes in world history. Much closer to home, on July 16, 2009 the University of California Board of Regents voted to enact a system wide furlough plan to offset the estimated $813 million reduction in income from California State Government to the UC System. This furlough plan, now in affect, directly impacts 108,000 full time positions in the UC system. Through the UC Davis campus, these changes have a direct impact on the network of financial entities in and around the city of Davis, California. In this talk I will discuss the possibility of research directly addressing these concerns. I will discuss my plan to develop a mathematical model that accurately describes the financial imprint UC Davis has on the greater Davis community. Last I will introduce some of the concepts in the financial world and ideas about how we as mathematicians can use our training to demystify and analyze the complex network that exists between buyers and sellers, companies and employees. Inquisitive minds are encouraged to participate and ask questions!