The document discusses a presentation about the financial crisis, its impacts on risk management, and key lessons learned. It begins with standard disclaimers and an agenda. The presentation argues that the crisis was due to systemic failures from national policies promoting homeownership, monetary policy, poor risk controls at firms, and corporate governance issues, rather than a lack of regulation. It also provides context on the Dodd-Frank Act and regulatory reform timeline.
Dr. Charles Calomiris "An Incentive-Robust Program for Financial Reform"Nataly Nikitina
KSE Open Lecture with Dr. Charles Calomiris (Columbia University Graduate School of Business) on "An Incentive-Robust Program for Financial Reform" was held on April 12, 2011.
Fears of the U.S. economy falling off a “fiscal cliff” have been percolating among investors, conjuring up frightening images of a deep recession. But the chances of it actually happening in its entirety are slim, say Allianz experts.
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
Identify in 150 - 200 words your reactions to the concepts of global.pdffathimafancyjeweller
Identify in 150 - 200 words your reactions to the concepts of globalization and Global Business
Ethics Issues.
Solution
Overview
The current financial crisis has raised questions about the legitimacy of capitalism. Ethical
failures certainly played a role. While it remains to be seen whether and how many people
blatantly broke the law, there are abundant signs of various forms of potentially unethical
behavior. These include greed, unreasonable amounts of leverage, subtle forms of corruption
(such as ratings agencies that appear to have had a conflict of interest), complex financial
instruments that no one really understood, and herd behavior where people just followed along
and failed to exercise independent judgment.
It is difficult or impossible to regulate against greed and against many of the other ethical
shortcomings that have been seen. What can be done is to force greater transparency and
accountability, a process which began with Sarbanes-Oxley and is expected to continue with new
regulations of the financial system.
Context
Drawing upon learnings from their work and experiences, the panelists and moderator exchanged
views with the audience on the ethics and legitimacy of business and capitalism in general, and
the financial crisis in particular.
Key Takeaways
The financial crisis may shift societal views on the legitimacy of business.
Each panelist offered a different perspective on the issue of ethics and legitimacy in business:
– The financial crisis has the potential to damage the legitimacy of capitalism (Di Tella). Richer
nations tend to be more right-wing in their views and have more capitalistic economic systems.
The United States is exceptionally right-leaning, even among developed nations.
These attributes are heavily influenced by beliefs regarding the reasons why people are
prosperous or poor. Americans tend to see prosperity as a product of effort more than luck; left-
leaning nations believe the opposite.
Affecting these beliefs: the number and severity of the shocks a society has weathered; and
perceptions regarding the legitimacy of business—i.e., the perceived degree of corruption.
America generally perceives that corrupt businesspeople are the exception, and punishes deviants
severely. However, this financial crisis holds the potential to shift America leftward since it: 1) is
a major shock that 2) suggests systemic corruption. Both call into some question the legitimacy
of U.S. capitalism.
– It is ethically legitimate for businesses to place the customer\'s interests above all else, because
only through profit comes the freedom to contribute to society (Vasella). Business leaders must
use their personal moral compasses to make ethical decisions. As for the business\'s compass, it
should be oriented toward satisfying customers above all stakeholders. That is the orientation
that allows for the greatest competitive success and profitability. In Mr. Vasella\'s view, only by
making a profit does a company earn the rig.
Moderninizing bank supervision and regulationcatelong
This is the testimony of Chris Whalen to the Senate Banking Committee on March 24, 2009 about bank and financial institution regulation and supervision.
Dr. Charles Calomiris "An Incentive-Robust Program for Financial Reform"Nataly Nikitina
KSE Open Lecture with Dr. Charles Calomiris (Columbia University Graduate School of Business) on "An Incentive-Robust Program for Financial Reform" was held on April 12, 2011.
Fears of the U.S. economy falling off a “fiscal cliff” have been percolating among investors, conjuring up frightening images of a deep recession. But the chances of it actually happening in its entirety are slim, say Allianz experts.
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
Identify in 150 - 200 words your reactions to the concepts of global.pdffathimafancyjeweller
Identify in 150 - 200 words your reactions to the concepts of globalization and Global Business
Ethics Issues.
Solution
Overview
The current financial crisis has raised questions about the legitimacy of capitalism. Ethical
failures certainly played a role. While it remains to be seen whether and how many people
blatantly broke the law, there are abundant signs of various forms of potentially unethical
behavior. These include greed, unreasonable amounts of leverage, subtle forms of corruption
(such as ratings agencies that appear to have had a conflict of interest), complex financial
instruments that no one really understood, and herd behavior where people just followed along
and failed to exercise independent judgment.
It is difficult or impossible to regulate against greed and against many of the other ethical
shortcomings that have been seen. What can be done is to force greater transparency and
accountability, a process which began with Sarbanes-Oxley and is expected to continue with new
regulations of the financial system.
Context
Drawing upon learnings from their work and experiences, the panelists and moderator exchanged
views with the audience on the ethics and legitimacy of business and capitalism in general, and
the financial crisis in particular.
Key Takeaways
The financial crisis may shift societal views on the legitimacy of business.
Each panelist offered a different perspective on the issue of ethics and legitimacy in business:
– The financial crisis has the potential to damage the legitimacy of capitalism (Di Tella). Richer
nations tend to be more right-wing in their views and have more capitalistic economic systems.
The United States is exceptionally right-leaning, even among developed nations.
These attributes are heavily influenced by beliefs regarding the reasons why people are
prosperous or poor. Americans tend to see prosperity as a product of effort more than luck; left-
leaning nations believe the opposite.
Affecting these beliefs: the number and severity of the shocks a society has weathered; and
perceptions regarding the legitimacy of business—i.e., the perceived degree of corruption.
America generally perceives that corrupt businesspeople are the exception, and punishes deviants
severely. However, this financial crisis holds the potential to shift America leftward since it: 1) is
a major shock that 2) suggests systemic corruption. Both call into some question the legitimacy
of U.S. capitalism.
– It is ethically legitimate for businesses to place the customer\'s interests above all else, because
only through profit comes the freedom to contribute to society (Vasella). Business leaders must
use their personal moral compasses to make ethical decisions. As for the business\'s compass, it
should be oriented toward satisfying customers above all stakeholders. That is the orientation
that allows for the greatest competitive success and profitability. In Mr. Vasella\'s view, only by
making a profit does a company earn the rig.
Moderninizing bank supervision and regulationcatelong
This is the testimony of Chris Whalen to the Senate Banking Committee on March 24, 2009 about bank and financial institution regulation and supervision.
Team Conflicted Capital Team - 2021 Technology, Innovation & Great Power Comp...Stanford University
Technology, Innovation and Great Power Competition,TIGPC, Gordian knot Center, DIME-FIL, department of defense, dod, intlpol 340, joe felter, ms&e296, raj shah, stanford, Steve blank, AI, ML, AI/ML, china, unmanned, autonomy, venture capital
1. Interestingly enough, while I wont stake a claim to any politi.docxjeremylockett77
1. Interestingly enough, while I won't stake a claim to any political party on this post, I have stood by one claim since I've been old enough to vote. I may not approve of the President or his actions; one thing is sure; I don't want his job either. I will take the same approach here. I believe government regulations could've helped prevent the major credit crisis of 2008 in many ways. However, as I have suggested, I don't necessarily have any full-proof ideas either. Regardless of the company, group, or entity, almost every organization has a series of checks and balances. For example, I can't help but wonder what condition people might be in without the formation of the FDA to regulate food and drugs to keep businesses in line (Seaquist, 2012). If you contemplate communist Germany during the rule of Hitler, aside from the mass genocide that spread through the area like wildfire, one more thing stands out. There was little to no freedom.
We, as humans, have proven that we are cyclical people. As mentioned, during WWII, many people had no freedom. From the opposite perspective, why do I need a babysitter when my wife and I go out to dinner? Primarily because the freedom otherwise given to a three and one-year-old would enable naive and creative minds to endanger themselves. There must be a balance, and there must be a group or entity with the power to prevent catastrophic issues like the credit crisis from happening. Having regulations in place would help both the greater good and businesses, although, at times, it may not seem like it. Looking back, I would be interested to learn if the investors and bankers that wanted a huge return on their money would do it all again had they known the impact of their actions prior to investing. Regardless of the situation, there must be a balance in all things. How do I know? Every single time I lose my balance, I fall.
2. I recall the time when everyone seemed to be living above their means, purchasing homes that they could not afford, cashing in equity on said home, and then using the money to purchase additional items. This type of greed and unwise financial dealings gave birth to the destruction of financial markets. The credit crisis of 2008 often referred to as the Great Recession is by far one of the worst economic down turns of our time. “Excessive borrowing, lending, and investment were inextricably interconnected through a range of transaction structures derived from well understood techniques of securitization. Essentially, securitization is a transaction structure in which loans (such as loans secured by residential real estate, i.e., mortgages) are pooled together ("repackaged") as collateral underlying the issuance of securities, predominantly debt securities”. The event caused great financial lost and caused homes to decrease greatly in value. However, after every crisis, the question is posed “what can be done to prevent this from happening again?”
The government is ...
Ivo Pezzuto - The “Miracle” Still Goes On For Someone…(Dr. Ivo Pezzuto and Dr...Dr. Ivo Pezzuto
This is a guest post on BASELINE SCENARIO by Ivo Pezzuto, Professor at the Swiss Management Center University (SMCU) in Zurich, Switzerland, and an experienced observer of the global financial services industry.
Presentation on Corporate Governance and the changing financial landscape. Includes up to date discussion (as of April 2011) of Dodd-Frank Act elements as well as current topics and research. Links to papers via box.net.
This is the G-30 club that Volker used to chair. This is a publically available document, so hopefully SlideShare can figure that out and not remove it.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...mayaclinic18
Whatsapp (+971581248768) Buy Abortion Pills In Dubai/ Qatar/Kuwait/Doha/Abu Dhabi/Alain/RAK City/Satwa/Al Ain/Abortion Pills For Sale In Qatar, Doha. Abu az Zuluf. Abu Thaylah. Ad Dawhah al Jadidah. Al Arish, Al Bida ash Sharqiyah, Al Ghanim, Al Ghuwariyah, Qatari, Abu Dhabi, Dubai.. WHATSAPP +971)581248768 Abortion Pills / Cytotec Tablets Available in Dubai, Sharjah, Abudhabi, Ajman, Alain, Fujeira, Ras Al Khaima, Umm Al Quwain., UAE, buy cytotec in Dubai– Where I can buy abortion pills in Dubai,+971582071918where I can buy abortion pills in Abudhabi +971)581248768 , where I can buy abortion pills in Sharjah,+97158207191 8where I can buy abortion pills in Ajman, +971)581248768 where I can buy abortion pills in Umm al Quwain +971)581248768 , where I can buy abortion pills in Fujairah +971)581248768 , where I can buy abortion pills in Ras al Khaimah +971)581248768 , where I can buy abortion pills in Alain+971)581248768 , where I can buy abortion pills in UAE +971)581248768 we are providing cytotec 200mg abortion pill in dubai, uae.Medication abortion offers an alternative to Surgical Abortion for women in the early weeks of pregnancy. Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the what'sapp number of my personal pi merchant who i trade pi with.
Message: +12349014282 VIA Whatsapp.
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the what'sapp contact of my personal pi merchant to trade with
+12349014282
G20 summit held in India. Proper presentation for G20 summit
The Financial Crisis Impact On Risk Management [Tom Day] Handouts
1. The Financial Crisis:
Impacts on Risk Management
and Key Lessons Learned
Presented by: Thomas Day
Vice-Chairman,
Vice-Chairman PRMIA Board of Directors and
Managing Director of Risk Solutions and Policy,
SunGard
2. Standard Disclaimer
• The views, expressions and ideas of this presentation are those of
the author and do not necessarily reflect the views and opinions of
SunGard or the Professional Risk Managers’ International
Managers
Association (PRMIA)
• Thank you to PRMIA, the Federal Reserve System, SunGard and
y y
all the participants and organizers of this conference. It is
noteworthy the duration and importance of this annual event at the
Chicago Federal Reserve Bank. Sixteen years in a row…in
November…couldn t
November couldn’t we have figured out by now a better date is in
July or August?
• I am going to strive to be slightly thought provoking as we hop on-
on
board the regulatory reform tsunami.
3. Agenda
• Now about that regulatory failure…
• Some words on the Dodd-Frank Act (DFA)
• The future of finance and, importantly, financial
risk management?
4. Agenda
• Now about that regulatory failure…
• Some words on the Dodd-Frank Act (DFA)
• The future of finance and, importantly, financial
risk management?
5. Do you recognize this quote?
This is “…the most important federal legislation
relating to the financial community since the 1930s ”
1930s.
1. “On March 31, 1980, President Carter signed into law the Depository Institutions Deregulation and
Monetary Control Act of 1980 the most important federal legislation relating to the financial community
1980,
since the 1930s. The act has nine titles covering a wide range of subjects, including reserve
requirements, access to and pricing of Federal Reserve services, a phase-out of Regulation Q and
new powers for thrift institutions.” – Frank Morris, Former President, FRB Boston
2. “Last year the Financial Modernization Act of 1999 (FMA) was signed into law. Also known as the
Gramm-Leach-Bliley Act, this statute represents the single most important set of regulatory reforms
Gramm Leach Bliley
since the Glass-Steagall Act of 1933.” - James Thompson, FRB Cleveland, 15-April-2000
…and here we are, once again, with the most important federal
legislation since the 1930s: The Dodd Frank Act (DFA) Collectively
Dodd-Frank (DFA). Collectively,
it seems we have a rather short memory. History is important. More
of us should study it.
6. What Really Happened?
• According to the media and, to some degree, the DFA
itself (and too many academics it seems):
Answer #1:
The regulators failed to control the excesses of the now
infamous “banksters”. Therefore, we need much more and
better regulation. Thus, the Dodd-Frank Act’s (DFA) majesty
will protect us from the next crisis because we’ve fundamentally
addressed the problems that created the global financial crisis.
DFA DFA
Banksters? Asleep at the wheel?
7. We take this Commercial Break to Set the
Record Straight: It wasn’t the regulators
Without the direct influence of We continue to possess a patchwork
congressional action(s), the of regulatory agencies, even if we
breadth, depth, duration, and have vested one agency with more
scope of the financial crisis could power than any other – the Fed.
never have happened. This crisis While the number of supporting
is a direct consequence of characters is vast, the fault rests
legislative ineptitude and an almost
eg s at e ept tude a d a a ost squarely with our legislators – which
complete absence of timely and means it rests with the American
responsible action by our people. What happens when the
legislature. sovereign becomes the greatest
sources of systemic risk?
8. The Truth About Regulation
• Charter shopping has been common for many years. One of the
best storied examples may be Colonial Bank, which failed on
August 14 2009
14, 2009.
• Goal: Which regulator will be most useful for me, the
“constituent”?
“ tit t”?
“Kerry Killinger, the CEO of Washington Mutual (WaMu) will be in town Friday
and wants toregulators, in their “relationship” largest constituent asset wise.”
o Some have a lunch meeting. He’s my management capacity, fancy
themselves as consultant/advisors, not beat-cops. Very few risk-focused
– May 2007, OTS internal e-mail
exams that labor on the USC and CFR. TBTF or TCTM?
• However: Weak regulation didn’t “cause” the problem. Moreover,
adding more of what didn’t work won’t fix the structural issues that
continue to exist. Thus, Answer #1 – regulators and banksters - is
wrong. Contributors? Sure. Foremost to blame? Not a chance.
9. The Truth About Regulation
• The regulators have had sufficient authority to clamp down
on excesses for a long time. We all know this fact.
• A strong approach didn’t happen for a large # of reasons:
o Charter shopping and “functional regulation”:
1) Divide and conquer, a good war-plan. Fighting battles on many fronts
war plan.
has never had much success.
2) A Congress eager to appease and “tear down those walls”
o “Ability” to supervise versus “Will” to supervise
y p p
1) “The banks are always two steps ahead of us.” Why? This is fixable.
However, in the years of enlightened regulation, it was assumed
proper and fitting.
o APA (P.L. 79-404) and the PRA (P.L. 96-511)
1) Good examples of how to institutionalize poor agility, flexibility and timeliness
10. IMF’s Lessons for us?
Worth reviewing:
1. Good supervision is intrusive
2. Good supervision is skeptical but proactive
3. Good supervision is comprehensive
4. Good supervision is adaptive
5. Good supervision is conclusive
To achieve these elements you need adequate resources
resources,
clear strategy, robust internal organization, effective working
relationship with other agencies (e.g., umbrella supervision)
and the willingness to act.
g
11. So, if not regulation, what then?
Idea: Capitalism and markets have failed. We can “fine-tune” the economy.
We have the right levers and knobs, we simply need to “fix” the inherent
failures of the market system. Put the right people in the cockpit and she will
fly.
LIFE LIBERTY and the
(…)
This is a fallacy. We haven’t had a “free” market system in a long-time. Our
current GSE (i.e., Government Sponsored Economy) is a direct result of
“covert collectivism”. In the United States you have the right to:
y g
…pursuit of a 5/1 IO mortgage at an affordable rate with little or no $ down. If
that doesn’t work, a Pick-a-Pay Option ARM with a 125% neg am cap will do.
12. So What Happened?
ANS: A Systemic Failure Due to our “Home Ownership is a
Right” National Policy Goals + “Fine-tuned” Monetary Policy
“To those of you who have not yet reached President's Club, I want each
and every one you to believe you have the potential to achieve this great
reward.
reward Now is the time to really kick it into high gear and drive for
attending this awesome event! Rankings are updated and posted
monthly... I'm especially pleased with your ability to change with the
market and responsibly sell more higher-margin p
p y g g product - Option ARM,
p
Home Equity, Non-prime, and Alt-A.” - November 2006, WaMu Internal E-mail
1. Can’t compete head-to-head with GSEs. A Risk Adjusted
Returns (in
funding curve we can t match. Improperly priced
can’t Basis Points)
credit derivatives & taxpayer funded dividends.
2. Cheap credit: A “glut” of liquidity
3. Incentive Plans: Focus on today’s GAAP
earnings, not value creation
value-creation ???
4. Poor risk-controls: growth, concentrations, funding
5. Lack of transparency
6. New and untested product(s)
13. So What H
S Wh t Happened?
d?
ANS: …. + Poor Monetary Policy
• From October of 2001 through
10 Year less 3-Month CMT September of 2005, the average spread
4
3.5
35 between 10-year UST and 3-mo UST
10 year 3 mo
was 262bp
3
2.5
• Coincident with the “removal” of this
2
spread via the curve flattening which
1.5
began in ~ Summer 2004, the market for
1 “opacity” picked-up. Reminiscent of the
0.5 1992-1994 structured note boom, but on
0
houses (whose values never decline!)
Oct-00
Apr-01
Oct-01
Apr-02
Oct-02
Apr-03
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
-0.5
-1
• In the search for yield,
opacity/complexity pays (or it did)
10 Year less 3-Month CMT
o CDO, PLRMBS, CDS, CLO,
SCDO, CDO^2, LCDS, CMBS,
CCOs, etc.
14. …and poor corporate governance
• Bonuses:
2006 = $60 billion Bonuses paid to the top 5
2007 = $66 billion
financial fi
fi i l firms i th U S A
in the U.S. Are
these “risk-adjusted” bonuses?
2008 = $72 billion
2009 = $90 billion
• Compensation should be based on value-creation, not the ability
to
t manufacturer short-term, GAAP ( IFRS) earnings; however,
f t h tt (or i h
many compensation packages have been based solely on ROE.
• The market should discipline rent-seekers. Equity is meant to be
“owned” not merely t d d and certainly not manipulated.
“ d” t l traded, d t i l t i l t d
• Like getting married. Should feel the full weight of “I Do.”
15. Summary Point: Not a lack of Regulation
• Misguided public policy in the form of directed credit and capital to the
housing industry spurred on by an aggressive curve slope for an
“extended period”
extended period
1. USG writing mispriced credit derivatives on housing should come to an end. Dealing
with housing policy should be the national priority, not simply the mortgage interest
deduction as discussed in the 1-Dec-2010 National Commission on Fiscal
Responsibility and Reform Report
2. USG writing of other guarantees should stop, or be accounted for via GAAP
o Sidebar: Should USG finances be GAAP-based? According to shadow stats, debt using
GAAP is ~$70.7 trillion in 2009, or approximately ~5x GDP
• Poor incentive structures within firms and a “sell-side”, “HFT”, “make a
quick buck” (i.e., “Noise”) mentality to equity ownership. This institutional
arrangement fosters rationally unsavory capital allocation decisions in the
pursuit of EPS.
it f EPS
• It raises profound questions about the corporate structure itself, and especially
corporate governance.
16. Agenda
• Now about that regulatory failure…
• Some words on the Dodd-Frank Act (DFA)
• The future of finance and, importantly, financial
risk management?
18. Broad Principles:
Robustness, Transparency, Resilience
• FSOC
• CCPs • Countercyclical capital
• Resolution Authority
• CFTC (from 14 to 20) • Contingent capital
• Office of Fin’l Research
• FMUs • FDIC assessments
• Volker Rule
• Improved disclosures • Basel-3
• Routine stress-testing
• OFR quality & quantity of
• Non-bank Fis
• CFPB capital
• Growth restrictions
• FIO ( US Solvency 2 )
(“US 2”) liquidity standards
• Redefine capital
Robust Transparent Resilient
International Harmonization and Coordination
(…) ESRB FSB G-20 FSB BCBS IOSCO (…)
19. Does the DFA help?
• The premise of the DFA is that the “problem” was weak
regulation. “If only the regulation had been stronger….”
o As noted previously, this is an incorrect starting point. Regulation in the
United States hasn’t been weak, it simply hasn’t been applied.
• But what about “Systemic Risk” and “Resolution
y
Authority”?
o The President’s Working Group (PWG), or any other number of forums,
could’ve easily been leveraged as the equivalent of the FSOC
y g q
o Establishing “living wills” is a critical step for the TBTF/TCTM firms, as is
the effort to harmonize these resolution cross-border.
o OPINION: Ultimately, we will need to “show” the market RA is ‘red in tooth
and claw’ b collapsing a TBTF/TCTM and hi i the credit stack, not j
d l ’ by ll i d hitting h di k just
equity.
20. DFA: It passes the “size” test
• DFA is only ~385,361 words
• However, the policy multiplier is ~10x
~3 853 610 words of policy
~3,853,610 d f li
• How many words in the Bible?
774,746, or a 4.97x factor
Gettysburg address 269 words
(14,325x)
Declaration of Independence is
p
1,337 words (2,882x)
• IRS code?
~5,500,000, or ~70%
5,500,000, 70%
http://bit.ly/DFA_DavisPolk
• Moral: We should be very busy Good summary of implementation timelines
21. Estimated Rulemaking by Agency
* Chart produced by DavidPolk in its July 9, 2010 Summary of the DFA
22. DFA: Structure
A Useful Index of DFA Elements:
TITLE I—FINANCIAL STABILITY
TITLE II—ORDERLY LIQUIDATION AUTHORITY
II ORDERLY
TITLE III—TRANSFER OF POWERS TO THE OCC, FDIC, AND THE BOARD
TITLE IV—REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
TITLE V—INSURANCE
TITLE VI - IMPROVEMENTS TO REGULATION OF OTS REGULATED FIRMS (shortened)
TITLE VII—WALL STREET TRANSPARENCY AND ACCOUNTABILITY
TITLE VIII—PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF SECURITIES
TITLE X BUREAU OF CONSUMER FINANCIAL PROTECTION
X—BUREAU
TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS
TITLE XII—IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
TITLE XIII—PAY IT BACK ACT
TITLE XIV—MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
TITLE XV—MISCELLANEOUS PROVISIONS
TITLE XVI—SECTION 1256 CONTRACTS
23. Financial Stability Oversight Council
Fi i l St bilit O i ht C il
Subtitle A of Title I
• The FSOC is established to oversee large, complex
financial organizations (bank and non-bank)
• Stress-testing:
Banks and non-banks deemed systemically important are
expected to p
p perform internal enterprise-wide stress-test semi-
p
annually (over than $10 billion – a low threshold – annually)
• Impact: Over-emphasis is possible. FRB, Basel, FDIC,
OFR, FSA
OFR FSA, and other approaches toward stress-testing
See: 1) Supervisory Capital Assessment Program (SCAP), 2) BCBS 155 –
“Principles for Sound Stress Testing Practices and Supervision”, 3) CP32 – CEBS
– “Guidelines on Stress Testing”, 4) etc
Is anyone trying and harmonize across borders? Much of the TBTF/TCTM should
be the product of a more universal set of enterprise-stress packages. Disclosure
should be a key element.
24. The Powers of the FSOC
• Arguably the centerpiece of the DFA (http://www.treas.gov/fsoc/)
• Has the power to define systemically important entities,
bank or non-bank
• Has the ability to subject such firms to regulation
o Credit, Capital Liquidity Concentration Disclosures Stress
Credit Capital, Liquidity, Concentration, Disclosures, Stress-
testing, and other required risk management protocols
• To date:
• Have held two well rehearsed public meetings (October 1, November 23rd)
• Notably, and startlingly, virtual silence after Barr’s preliminary findings
from the Foreclosure Task Force – “…inexcusable breakdowns in basic controls…” and
these issues are “…widespread…”
25. Subtitle B: Office of Financial Research
• Can and should be one of the most important
elements of Title I
• Began as S.3005: CE-NIF (http://www.ce-nif.org/)
o Idea is to harmonize data standards
“Bank information systems are not designed to aggregate information in
this way on a regular basis. Much improvement is needed in these
systems…but until strides are made, comprehensive stress-testing will
remain very difficult.””…the issues I’ve just mentioned make me reluctant to
difficult the I ve
begin conducting such tests routinely as the cornerstone of our
supervision.” (also emphasized that PFRs shouldn’t disclose the results)
– Former Comptroller John Dugan, April 15, 2010, Richmond FRB
o Idea, one of many, is to analyze and assess cross-entity
risks
26. OFR: The Dream v. the Reality
• Federal Reserve announces its own Office of Financial Stability
Policy and Research on November 4th
o How will these interact?
o What are the intentions of the FRB with regard to OFR?
• OFR could be viewed as a needed “fixer” and “motivator” of the
technology infrastructure improvements that are desperately
needed in SIFIs
• Requires vigilance and participation by industry risk managers
and IT professionals, esp when you hear sentiment such as:
“The OFR must not duplicate existing government data collection efforts or
impose unnecessary burden.”
p y
…and see meetings with the FRB like the recent Financial Services
Roundtable, November 15, 2010 (http://bit.ly/FSR_FRB)
27. Living Wills:
Orderly Liquidation Authority
• Warning: When you hear - “The Taxpayer will never….”
• Cross-border resolution of SIFIs was a missing element in the
recent crisis
o 13(3) powers of the FRB have been curtailed under DFA
“…unusual and exigent circumstances…” clause of FRA §13
• FDIC, in collaboration with the other PFRs, is moving to
create realistic Resolution Plans
• Numerous studies are required relative to operation of OLA v.
BK, international issues, and other matters.
28. Other Areas of Impact
• Enterprise Risk Management
Expect a greater emphasis on enterprise risk management, a deeper
analysis of processes, need for adherence to established best-practice,
best practice,
and Board level risk-committee structure(s) [culture not compliance]
• Executive and Incentive Compensation
Expect your risk management group to be part of these discussions
“Compensation practices at some banking organizations have led to misaligned
incentives and excessive risk-taking, contributing to bank losses and financial
risk taking
instability.” – Chairman Ben Bernanke, October 2009
• Consumer Protection Rules
• Liquidity and Capital
29. What is missing from DFA?
• Doesn’t deal with the fundamental problems that created the crisis.
Apologies to those that don’t like the term “malinvestment”. I find that the
shoe fits
fits.
• FSOC. What is a bubble? How can you tell?
What if the greatest source of Systemic risk is the sovereign or one of its
appendages? (
pp g (and that’s the easy problem)
yp )
• CFPB. Just wondering what happened to caveat emptor.
Off to a wobbly start. Wondering about warning labels.
• TBTF. Need to see how OLA works in practice.
p
• OFR and the OFSP&R
A lot of potential, potentially.
• Compensation.
Compensation Title IX is a good stretch. Believe corporate
stretch
governance should have as much attention as risk management.
30. Agenda
• Now about that regulatory failure…
• Some words on the Dodd-Frank Act (DFA)
• The future of finance and, importantly, financial
risk management?
31. Impact of reform on risk management
• Risk Management Impact?
• F ll employment at:
Full l t t
Deloitte, KPMG, PwC, BAH,
Promontory
Have regulatory experience,
experience
will hire
• Major areas of need:
Infrastructure issues
ERM is “for keeps”
Massive need for education
32. PRMIA areas of influence Holding to the Highest Standards
in Institutional Risk Management
Globally.
Network. Understand. Act.
19 28 18
Chapters Chapters Chapters
33. Collaboration and Situational
Awareness is Critical
• Our success throughout the reform process will be a
function of effective collaboration.
– paraphrase of Neal Wolin
• “…global policy cooperation is fracturing at best ”
global best.
- John Lipsky, IMF
• Markets remain fragile and it’s imperative we avoid
it s
sliding into financial protectionism
34. Many Opportunities for
Improvement
• CRO Attestation to Internal Risk Management Practices
• Developing a Uniform Set of Risk Management Standards
Principles, not rules
• Continued development of “specialists of the whole”
“On a Global Foresight Commons”, Carol Dumaine, 23 Nov 2010
On Commons , 23-Nov-2010
Unwinding Orthodoxy, the Value of Heresy, learning to “…profoundly challenge
the status quo.”
• The US is only “now” joining the International Association of
y j g
Insurance Supervisors (see FIO)
• Expert needs around stress-testing
Subjectivity,
Subjectivity Risk Imagination, and Expert-Based Systems
Imagination
SME Swarming, Risk Mash-ups, Network Sensors, COEs (industry,
regulatory, intelligence industry, other?)
35. Areas of Current Risk Focus
• The search for earning assets
Beware the rise of Interest Rate Risk
• Balance sheet management
New volumes – credit spread, risk and duration
Funding and deposit strategies (preparations made?)
Capital planning, including focus on non-organic
growth (M&A should pick up)
Balance b
B l between li idi and need f spread
liquidity d d for d
• Profitability, margin-protection, and efficiency
• Financial risk and corporate governance
• Regulatory preparedness
36. The Financial Crisis:
Impacts on Risk Management
and Key Lessons Learned
Presented by: Thomas Day
THANK YOU!
Contact at: dc.prmia@gmail.com