Michael Ehrlich, a finance professor in the School of Management at New Jersey Institute of Technology (NJIT), isn’t concerned about the current crisis in sub-prime mortgages. The former Wall Street managing director, who has had first-hand experience with stock market roller coasters, predicts that the Federal Reserve will respond to the crisis by injecting liquidity.
“I expect the Fed to lower its federal funds rate at its next regular meeting Sept. 18, 2007 of the Federal Open Market Committee of the Federal Reserve System,” he said. "Wall Street's typically young traders have never experienced a liquidity crisis. These unexpected events pop up with surprising regularity."
Ehrlich, whose specialty is market failure, is available to discuss domestic and emerging securities markets, financial engineering, entrepreneurial finance, and small businesses: For further information email firstname.lastname@example.org or telephone (973-596-5305, office) or (516-330-5810, cell).
Now in academia, Ehrlich has seen the stock market in crisis before. During the 1994 Mexican peso crisis, he was Bear Stearns Senior Managing Director for the emerging markets fixed income business unit. In 1991, he managed proprietary fixed income trading in Asia for Salomon Brothers when Salmon’s Treasury bond scandal broke. He also ran Salomon’s trading business for OTC Treasury options during the 1987 stock market crash. He was at Lehman Brothers Kuhn Loeb in 1984 when Continental Illinois Bank faced a "bank run" after absorbing bad loans from Penn Square.
Ehrlich advises individual long-term investors to hold on for the ride while highly-leveraged hedge funds and structured investment vehicles recognize some losses. While there is likely to be some short-term slow down of the U.S. economy due to widening credit spreads, the Federal Reserve will manage interest rates to limit the effects. Ehrlich received his bachelor’s degree from Yale University and his doctorate in economics from Princeton University.