Chester Spatt
Professor Carnegie Mellon University
- Pittsburgh PA
Chester Spatt has been a leader in financial economics for more than four decades.
Biography
Areas of Expertise
Media Appearances
Why mortgage rates aren’t falling—despite the tariff pause
CNBC online
2025-04-11
Mortgage rates are likely to remain high due to rising yields on 10-year Treasury bonds, which have surged about 9% since early April. This reflects “the elevated volatility in financial markets due to the tariffs and fears of a recession,” says Chester Spatt (Tepper School of Business).
Why Trump’s Crypto Reserve Plan Has Experts Worried
Time online
2025-03-04
Trump’s plan for a national crypto reserve has raised concerns among experts, with Chester Spatt (Tepper School of Business) warning that relying on Bitcoin to reduce U.S. debt is risky and unpredictable.
An outdated IRS tax law that’s unchanged since the Clinton era is making the U.S. housing crisis worse
Fortune online
2025-01-27
Many homeowners are hesitant to sell as outdated capital gains tax exclusions fail to account for skyrocketing property values and high mortgage rates. Chester Spatt (Tepper School of Business) said that “most homeowners are reluctant to sell properties with 3% or 4% underlying mortgage loans,” which is tightening the housing supply and making the U.S. housing crisis worse.
How to Get a Mortgage Rate Under 3% as Rates Climb Above 7%
Newsweek online
2025-01-15
With 30-year fixed mortgage rates hovering near 7 percent, potential home buyers may have found a workaround in assumable mortgages (a government loan a buyer takes over from the seller). Chester Spatt (Tepper School of Business) says don't expect to cut the interest rate in half as "relatively few of the 3% and 4% mortgages issued a few years ago are assumable."
Biden blocks takeover of U.S. Steel by Japan's Nippon Steel
Reuters online
2025-01-03
With the acquisition of U.S. Steel, Nippon Steel aimed to raise its global output capacity to 85 million metric tons a year from the current 65 million, nearing its long-term goal of taking capacity to 100 million tons.
"The Nippon deal would have increased the ability to have more competition for domestic steel," said Chester Spatt, a finance professor at Pittsburgh's Carnegie Mellon University. "The deal could have potentially created a competitive advantage, and we should have encouraged it."
Do meme stocks help the companies they highlight?
Marketplace online
2022-08-18
A company can capitalize on becoming a meme stock if its stock price stays up for long enough — mainly by issuing new stock, said Chester Spatt at Carnegie Mellon University.
Twitter shares are still below Musk’s offer price for the company. Should you buy it cheaper now and make a tidy profit? Proceed with caution, experts say.
MarketWatch online
2022-04-27
The timelines for sewing up major acquisitions can vary quite significantly, said Chester Spatt, a professor at Carnegie Mellon University’s Tepper School of Business teaching financial regulation.
Biden Proposed Stock Buyback Restrictions. What Advisors Need to Know.
Barron's online
2022-03-29
“I think the economic costs of the proposal would be considerable and the likely revenue limited because of the types of changes in behavior,” said Chester Spatt, a professor of finance at Carnegie Mellon University’s Tepper School of Business. “Companies may become reluctant to raise capital because of complications in returning it to shareholders, make inefficient investment choices that hurt our economy and discourage incentive compensation to executives.”
Inflation Is Everywhere, Including Places You Might Not Expect
The Wall Street Journal online
2022-02-13
“It kind of cascades from initially a small set of goods to a much larger set of goods,” said Chester Spatt, who was chief economist at the Securities and Exchange Commission from 2004 to 2007 and is now a professor of finance at Carnegie Mellon University.
American Airlines set to issue new stock after price run-up
AP News online
2021-01-29
Chester Spatt, a finance professor at Carnegie Mellon, said American should tell potential investors that its price may be inflated by current market turmoil, but also said that it was “natural” for the company to make an offering.
“If a company feels that its stock price is elevated, it’s reasonable for a company to issue securities,” Spatt said.
Media
Social
Industry Expertise
Education
Princeton University
B.A.
Economics
1975
University of Pennsylvania
M.A.
Economics
1976
University of Pennsylvania
Ph.D.
Economics
1979
Links
Articles
A survey of the microstructure of fixed-income markets
Journal of Financial and Quantitative Analysis2020
In this article, we survey the literature that studies fixed-income trading rules and outcomes, including Treasury securities, corporate and municipal bonds, and structured credit products. We compare and contrast the microstructure and regulation of fixed-income markets with equity markets. We highlight the nature of over-the-counter trading in the face of search costs and the associated slow evolution of electronically facilitated intermediation. We discuss the databases available to study fixed-income microstructure, as well as measures and determinants of trading costs, and the important roles dealer networks and limited transparency play. We also highlight unresolved issues.
Conflicts of interest in asset management and advising
Annual Review of Financial Economics2020
This review addresses, from a unified perspective, the important role of conflicts of interest in various facets of asset management and advising, including managing individual portfolios, institutional asset management, and order routing. I use an agency framework to highlight the sources of the underlying incentive conflicts, the nature of efficient solutions, the role of the structure of compensation in mitigating (or creating) the agency problem, and the use of benchmarks as a solution. I also highlight several contemporary contexts in which conflicts of interest are important.
A tale of two crises: The 2008 mortgage meltdown and the 2020 COVID-19 crisis
The Review of Asset Pricing Studies2020
The causes and consequences of the 2008 mortgage meltdown and 2020 COVID-19 crisis are quite different: the 2008 mortgage meltdown reflected infection of the financial system due to excess leverage and poor-quality mortgage loans, and the recent crisis reflects a substantial global economic shock to contain the viral outbreak of the coronavirus. Yet the financial and medical systems share many elements, such as opacity and interconnectedness as well as adequate buffers and reserves. We examine these themes as well as asset pricing, moral hazard (though it was at the root of the crisis only in the Great Recession), the consequences for government as a systemic actor, economic concentration, and capital market regulation in the two crises. In both crises, interventions in financial markets and disruptions in the housing market played important, but differing, roles.
Proxy advisory firms, governance, market failure, and regulation
The Review of Corporate Finance Studies2021
Proxy advisory firms developed due to market failures underlying voting and corporate governance more broadly. However, these firms, which have not been subject to mandatory regulation, reflect their own market failures, emphasizing challenges underlying corporate governance. We highlight underlying frictions, such as economies of scale and public goods aspects to information production, the import of incentive conflicts faced by the advisory firms, their power, and the implications of their recommendations and votes by different types of investors. Asset managers emphasizing stewardship are more supportive of management than are proxy advisors. We highlight the evolving regulatory environment and limitations of one-size-fits-all recommendations.
Big data in finance
The Review of Financial Studies2021
Big data is revolutionizing the finance industry and has the potential to significantly shape future research in finance. This special issue contains papers following the 2019 NBER-RFS Conference on Big Data. In this introduction to the special issue, we define the “big data” phenomenon as a combination of three features: large size, high dimension, and complex structure. Using the papers in the special issue, we discuss how new research builds on these features to push the frontier on fundamental questions across areas in finance—including corporate finance, market microstructure, and asset pricing. Finally, we offer some thoughts for future research directions.
