Mortgage and Finance Expert Dwight Jaffee Passes Away

Real estate and finance professor Dwight M. Jaffee passed away peacefully on Thursday, January 28, 2016, in San Francisco, CA, at the age of 72.

He lived in Berkeley, CA.

Jaffee was the Willis Booth Professor of Banking, Finance, and Real Estate, and a member of the Finance Group at the Haas School of Business. He also served as co-chairman of the school’s Fisher Center for Real Estate and Urban Economics.

Since arriving at Berkeley-Haas in 1991, he established himself as a respected scholar in mortgage markets, banking, risk and catastrophe insurance, and international trade. Most recently, he testified in front of Congress and the SEC in hearings on Freddie Mac, Fannie Mae, and the recent banking and housing crisis.

“A major theme of Dwight’s research was the negative impact of federal government policies on the mortgage markets,” said Ken Rosen, chair of the Fisher Center, who with Jaffee authored an early paper published by the Brookings Institution that showed the adverse effect of interest rate ceilings on deposit flows to savings and loans. “More recently, Dwight advocated for the privatization of the residential mortgage market by suggesting mechanisms for winding down the role of Fannie Mae and Freddie Mac.”

Jaffee also expressed those views in a 2010 opinion piece published in the Wall Street Journal.

“Dwight Jaffee was a world-class scholar who made profound contributions to our understanding of contracting under asymmetric information and issues related to the operation of the mortgage and insurance markets that are among the largest capital markets in the world,” said Professor Nancy Wallace, the Lisle and Roslyn Payne Chair in Real Estate Capital Markets and co-chair with Jaffee of the Fisher Center.

“Dwight had a razor-sharp intellect, which he applied with skill and grace in his efforts to affect the public policy debate on questions related to the causes of the financial crisis—which he had anticipated years before its onset,” added Wallace.

Jaffee was an advisor to many central banks throughout Europe. He was the author of more than seven books, including The Impact of Globalization in a High-Tech Economy, co-authored with Ashok Bardhan and Cynthia Kroll and published in 2003, and The Oxford Handbook of Offshoring and Global Employment, which he edited with Cynthia Kroll and Ashok Bardhan and which was published in 2013. He also authored 171 papers in the fields of money and banking, finance, and risk and catastrophe insurance.
“Dwight was instrumental to our school’s preeminence in real estate finance and blazed new trails in related areas as well—such as how markets can and should insure against the risk of catastrophes like earthquakes,” said Haas School Dean Rich Lyons. “On top of all this, he was cherished as a colleague and an all-around good guy.”
In the last few years, Jaffee also examined the role played by capital markets in explaining the collapse of private markets in catastrophe insurance. Following a catastrophic event, whether natural, such as an earthquake, or man-made, such as a terrorist attack, the insurance market needs access to large quantities of capital to pay out on potentially large losses.

Unwilling or unable to meet this requirement, many private insurers abandoned the catastrophe insurance line. Jaffee, in a number of papers, raised the question whether state and federal government play an appropriate role in supporting this market.
“Among his many academic talents, Dwight was a skilled and insightful applied econometrician. His individual warmth and vibrant personality combined to make him a terrific teacher and an even better friend,” said Dan Rubinfeld, the Robert L. Bridges Professor of Law and Professor of Economics at New York University’s School of Law and a faculty associate at the Fisher Center.
Throughout his career, Jaffee received many awards, including the 2007 Robert I. Mehr Award from the Journal of Risk and Insurance. He was an associate editor at Housing Finance Review, the Journal of Economic Perspectives, Journal of Finance, Journal of Monetary Economics, and the Journal of Money, Credit, and Banking.
In the early 1990s, he led a joint project between the Haas School of Business and the Graduate School of Management in St. Petersburg University, Russia, to establish the city’s first post-Soviet era school of business. Prior to joining Berkeley-Haas, Jaffee was a professor of economics at Princeton University from 1968 to 1990.
“One of his greatest passions was his mentorship of countless undergraduate and graduate students at both Berkeley and Princeton,” said his wife, Lynne LaMarca Heinrich, a lecturer and advisory board member of the Center for Social Sector Leadership at Berkeley-Haas. “It’s what led him to establish an endowed fund at MIT. Another was his vibrant and intellectual relationships with so many of his Berkeley colleagues. He claimed, to the end, that he had no remaining bucket list…that he’d accomplished what he had set out to do, and his life was full and meaningful.”
Jaffee’s passion for teaching was central to his life’s work. “I view teaching as a way to transmit research results to young people and maybe even create within them a great desire to understand and carry out their own research,” Jaffee once said in an interview with a Berkeley-Haas news writer. “I think there’s just no doubt the biggest legacy of the school is the students.” Jaffee was named one of the “World’s Best B-School Professors” by the website Poets & Quants in 2012.
“Dwight was instinctively accessible to colleagues and students for interaction and counsel. His advice was thoughtful and incisive,” says Professor Robert Edelstein, the Maurice Mann Chair in Real Estate and also co-chair with Jaffee of the Fisher Center. “On a personal level, he was gracious and jovial, with a wide smile and a kind word.”

Jaffee was born in Chicago, IL, on February 7, 1943, to Gertrude and Woodrow Jaffee. He received his BA (Phi Beta Kappa) from Northwestern University in 1964 and his Ph.D. in Economics from MIT in 1968. Besides his wife, Lynne, Jaffee is survived by his mother, Gertrude, of Boca Raton; his daughter, Elizabeth, known as Betsy, a Foreign Service Officer with the U.S. Department of State; his son, Jonathan, Assistant Professor of Strategy, Law, & Organizations at the Drucker School of Management, Claremont Graduate University and Haas Ph.D. alumnus; and two grandchildren.
In addition to his academic pursuits, Dwight was known for his connoisseurship of fine wine, love of travel, hiking in the hills of Marin County, and loving friendships.
In lieu of flowers, the family has asked that gifts be directed to the Dwight M. Jaffee (1968) Endowed Fund for Graduate Students at MIT, c/o Bonny Kellermann 72, MIT Director of Memorial Gifts, 600 Memorial Drive, Room W98-526, Cambridge, MA 02139, or https://giving.mit.edu/give/to?fundId=3302325.

Jaffee’s memorial will be held on Sunday, March 13, 2016, at 3 p.m. at the University Club at California Memorial Stadium.

Please RSVP to Linda Algazzali at algazzal@berkeley.edu by March 4, 2016.

Dwight Jaffee

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