Thursday 9 October 2008
Cyberlaw prof blames computer programs for economic crisis
An interesting article by Prof. Erik Gerding of UNM Law School looks at one of the problems leading to the financial crisis: the proprietary software that financial institutions rely on to make decisions. He looks at how the crash of these computer-based "codes," particularly risk models, triggered the subprime mortgage crisis and on ways to mitigate risks posed by these codes. His study reveals a critical flaw in financial regulation: regulators outsourced vast regulatory authority to the proprietary codes of financial institutions, without examining defects in those codes. One proposal to help solve this problem : open source code.