Ex-treasury official Robert Glauber dies
Robert R. Glauber, a Harvard University business school professor whose leadership on a presidential commission after the 1987 stock market meltdown led to new rules to temporarily halt trading as a way to prevent extreme drops in the financial markets, died Feb. 14 at his home in Brookline, Mass. He was 81.
The cause was pancreatic cancer, said his wife, Barbara Winter “Muffy” Glauber.
Glauber, an expert in corporate finance and investment banking, was selected by former senator Nicholas Brady, R-N.J., a prominent Wall Street securities executive, to serve as executive director of a commission created to determine the cause of the Oct. 19, 1987, market breakdown, known as Black Monday, and to propose steps to prevent similar crashes from happening in the future.
The task force, chaired by Brady and popularly known as the Brady Commission, set up shop in Manhattan in late 1987 and was given just 60 days to investigate the stock market free fall - when the Dow Jones industrial average dropped a historic 508 points, or 22.6%, in a single day of trading - and to report its findings to help restore confidence in the stability of the markets.
Even though the stock market rebounded somewhat in the ensuing days, the swiftness of the sharp decline left many investors unnerved. Glauber brought with him a Harvard colleague, David Mullins, to serve as his deputy. Together, they oversaw a staff of 50 people who poured over financial data, reviewed transaction records and interviewed regulatory officials, investment bankers and money managers, some of whom Glauber had taught at Harvard.
“It was a super intense time,” said Barbara Glauber. “It was like a homicide investigation where the murderer was still on the loose.”
Glauber and Mullins cowrote most of the report for what was officially named the Presidential Task Force on Market Mechanisms. The report cited “triggering” events - such as proposed tax legislation and a higher-than-expected trade deficit leading to higher interest rates - as setting the stage for the massive selloff that unfolded on Black Monday.
The task force placed the blame for the crash on automated computer trading and investment programs of a few large institutional money management firms as well as selling pressure in the futures exchange and options markets.
The report recommended that the various financial markets be regulated as one system. But its most consequential proposal, which was later implemented by regulators, was the idea of “circuit breakers” to temporarily stop trading in an effort to calm the markets in the face of rampant selloffs. Circuit breakers were utilized during precipitous drops in the stock market in October 1997 and March 2020.