Richard Bookstaber

Richard Bookstaber is a risk management practitioner with an unusual combination of deep Wall Street experience and academic credentials (PhD in economics from MIT). He served as head of risk management at Morgan Stanley and Salomon Brothers during critical periods in the 1980s-2000s, directly managing through crises including the 1987 crash, the LTCM episode, and the dot-com collapse. His 2007 book "A Demon of Our Own Design" presciently argued that financial innovation — particularly derivatives and complex structured products — creates systemic fragility by increasing tight coupling and complexity in financial networks, making catastrophic failures more likely. The book was largely dismissed before 2008 and hailed as prophetic afterward. After the financial crisis, Bookstaber joined the U.S. Treasury's Office of Financial Research and the Federal Reserve Board as a senior risk official, applying his crisis insights to regulatory surveillance. His 2017 follow-up "The End of Theory" argues that agent-based models better capture financial system dynamics than conventional equilibrium economics.