Sherman J. Maisel
Encyclopedia
Sherman Joseph Maisel was an American economist who served on the board of governors of the Federal Reserve System
. Research on mortgage policy conducted by Maisel led to the expansion of the roles played by Fannie Mae and Ginnie Mae
in encouraging the broader availability of loans to homeowners.
Maisel was born on July 8, 1918, in Buffalo, New York
. After completing his undergraduate degree in economics from Harvard University
in 1939, Maisel worked as a research economist working for the Federal Reserve Board in Washington, D.C.
He served in the United States Army
during World War II
beginning in 1941, attaining the rank of Captain by the time he completed his military service in 1945. After a brief career for the Foreign Service
in Brussels
, Maisel returned to Harvard, where he earned Master of Public Administration
and a Master of Arts
in economics in 1947 and 1948 and was awarded a Ph.D. in 1949.
Hired by the Haas School of Business
in 1948, Maisel helped establish the school's Center for Real Estate and Urban Economics.. Maisel became involved in local politics, and was elected to the board of education of the Berkeley Unified School District
, serving from 1962 to 1965. After the board approved a plan to address segregation in the district's junior high schools, Maisel faced and won a recall election
, in which he encouraged students at the University of California, Berkeley
to register and participate in the vote. When he was nominated to serve as a governor of the Federal Reserve System, he met with President Lyndon B. Johnson
, who expressed more interest in the details of the Berkeley recall vote than in Maisel's opinions on economic policy.
Research performed by Maisel concluded that the traditional pattern of local savings and loan association
s making mortgage loans to home buyers exacerbated recessions because they were less willing to lend during economic downturns. As a member of a White House task force on mortgage policy, Maisel and his colleagues recommended that Ginnie Mae should provide guarantees for mortgage-backed securities
and that Fannie Mae should be operated independently of the federal budget. These changes were intended to provide greater liquidity to the mortgage market, which would add to economic activity in up or down markets by making it easier to obtain mortgages.
As a member of the National Bureau of Economic Research
's senior research staff from 1978 to 1980, he worked on on a project for the national Science Foundation
that studied how government insurance of bank accounts effected capital and risk levels assumed by banks and other lending institutions. The group's findings exposed the moral hazard
that existed based on the access to guaranteed funds and from the focus on book value
rather than real net worth
. The group's recommendations were not followed, and many of the changes the group opposed were implemented, factors that helped exacerbate the savings and loan crisis
in the 1980s and cost the federal government billions in rescue costs of bad loans.
After his seven-year term expired in 1972, Maisel returned to California and resumed teaching at Haas until his retirement in 1986. He was a fellow of the American Finance Association
, and was the organization's president in 1973.
Maisel died in San Francisco at the age of 92 on September 29, 2010, due to respiratory failure
. He was survived by his wife, Lucy Cowdin Maisel, whom he had met in 1939 when they were both interns with the National Institute for Public Affairs. He was also survived by a daughter, a son and two grandchildren.
Federal Reserve System
The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...
. Research on mortgage policy conducted by Maisel led to the expansion of the roles played by Fannie Mae and Ginnie Mae
Government National Mortgage Association
The Government National Mortgage Association , or Ginnie Mae, was established in the United States in 1968 to promote home ownership. As a wholly owned government corporation within the Department of Housing and Urban Development , Ginnie Mae’s mission is to expand affordable housing in the U.S. by...
in encouraging the broader availability of loans to homeowners.
Maisel was born on July 8, 1918, in Buffalo, New York
Buffalo, New York
Buffalo is the second most populous city in the state of New York, after New York City. Located in Western New York on the eastern shores of Lake Erie and at the head of the Niagara River across from Fort Erie, Ontario, Buffalo is the seat of Erie County and the principal city of the...
. After completing his undergraduate degree in economics from Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
in 1939, Maisel worked as a research economist working for the Federal Reserve Board in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
He served in the United States Army
United States Army
The United States Army is the main branch of the United States Armed Forces responsible for land-based military operations. It is the largest and oldest established branch of the U.S. military, and is one of seven U.S. uniformed services...
during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
beginning in 1941, attaining the rank of Captain by the time he completed his military service in 1945. After a brief career for the Foreign Service
United States Foreign Service
The United States Foreign Service is a component of the United States federal government under the aegis of the United States Department of State. It consists of approximately 11,500 professionals carrying out the foreign policy of the United States and aiding U.S...
in Brussels
Brussels
Brussels , officially the Brussels Region or Brussels-Capital Region , is the capital of Belgium and the de facto capital of the European Union...
, Maisel returned to Harvard, where he earned Master of Public Administration
Master of Public Administration
The Master of Public Administration is a professional post-graduate degree in Public Administration. The MPA program prepares individuals to serve as managers in the executive arm of local, state/provincial, and federal/national government, and increasingly in nongovernmental organization and...
and a Master of Arts
Master of Arts (postgraduate)
A Master of Arts from the Latin Magister Artium, is a type of Master's degree awarded by universities in many countries. The M.A. is usually contrasted with the M.S. or M.Sc. degrees...
in economics in 1947 and 1948 and was awarded a Ph.D. in 1949.
Hired by the Haas School of Business
Haas School of Business
The Walter A. Haas School of Business, also known as the Haas School of Business or simply Haas, is one of 14 schools and colleges at the University of California, Berkeley....
in 1948, Maisel helped establish the school's Center for Real Estate and Urban Economics.. Maisel became involved in local politics, and was elected to the board of education of the Berkeley Unified School District
Berkeley Unified School District
Berkeley Unified School District is the public school district for the city of Berkeley, California. Its administrative offices are located in Berkeley's old city hall on Martin Luther King Jr. Way between Center Street and Allston Way...
, serving from 1962 to 1965. After the board approved a plan to address segregation in the district's junior high schools, Maisel faced and won a recall election
Recall election
A recall election is a procedure by which voters can remove an elected official from office through a direct vote before his or her term has ended...
, in which he encouraged students at the University of California, Berkeley
University of California, Berkeley
The University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
to register and participate in the vote. When he was nominated to serve as a governor of the Federal Reserve System, he met with President Lyndon B. Johnson
Lyndon B. Johnson
Lyndon Baines Johnson , often referred to as LBJ, was the 36th President of the United States after his service as the 37th Vice President of the United States...
, who expressed more interest in the details of the Berkeley recall vote than in Maisel's opinions on economic policy.
Research performed by Maisel concluded that the traditional pattern of local savings and loan association
Savings and loan association
A savings and loan association , also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans...
s making mortgage loans to home buyers exacerbated recessions because they were less willing to lend during economic downturns. As a member of a White House task force on mortgage policy, Maisel and his colleagues recommended that Ginnie Mae should provide guarantees for mortgage-backed securities
Mortgage-backed security
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization.-Securitization:...
and that Fannie Mae should be operated independently of the federal budget. These changes were intended to provide greater liquidity to the mortgage market, which would add to economic activity in up or down markets by making it easier to obtain mortgages.
As a member of the National Bureau of Economic Research
National Bureau of Economic Research
The National Bureau of Economic Research is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end...
's senior research staff from 1978 to 1980, he worked on on a project for the national Science Foundation
National Science Foundation
The National Science Foundation is a United States government agency that supports fundamental research and education in all the non-medical fields of science and engineering. Its medical counterpart is the National Institutes of Health...
that studied how government insurance of bank accounts effected capital and risk levels assumed by banks and other lending institutions. The group's findings exposed the moral hazard
Moral hazard
In economic theory, moral hazard refers to a situation in which a party makes a decision about how much risk to take, while another party bears the costs if things go badly, and the party insulated from risk behaves differently from how it would if it were fully exposed to the risk.Moral hazard...
that existed based on the access to guaranteed funds and from the focus on book value
Book value
In accounting, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or Impairment costs made against the asset. Traditionally, a company's book value...
rather than real net worth
Net worth
In business, net worth is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time...
. The group's recommendations were not followed, and many of the changes the group opposed were implemented, factors that helped exacerbate the savings and loan crisis
Savings and Loan crisis
The savings and loan crisis of the 1980s and 1990s was the failure of about 747 out of the 3,234 savings and loan associations in the United States...
in the 1980s and cost the federal government billions in rescue costs of bad loans.
After his seven-year term expired in 1972, Maisel returned to California and resumed teaching at Haas until his retirement in 1986. He was a fellow of the American Finance Association
American Finance Association
The American Finance Association is an academic organization whose focus is the study and promotion of knowledge of financial economics. It was formed in 1939...
, and was the organization's president in 1973.
Maisel died in San Francisco at the age of 92 on September 29, 2010, due to respiratory failure
Respiratory failure
The term respiratory failure, in medicine, is used to describe inadequate gas exchange by the respiratory system, with the result that arterial oxygen and/or carbon dioxide levels cannot be maintained within their normal ranges. A drop in blood oxygenation is known as hypoxemia; a rise in arterial...
. He was survived by his wife, Lucy Cowdin Maisel, whom he had met in 1939 when they were both interns with the National Institute for Public Affairs. He was also survived by a daughter, a son and two grandchildren.
Publications
- Real Estate Finance, 2nd ed. The Dryden Press Harcourt Brace, 1992.
- Macroeconomics: Theories and Policies. New York: W.W. Norton, 1982.
- Risk and Capital Adequacy in Commercial Banks. U. of Chicago Press, 1981. Midway Reprint Edition, 1986.