Search Results
Journal Article
The Federal Home Loan Bank system : the \"other\" housing GSE.
Founded in 1932, the twelve Federal Home Loan Banks (FHLBs) have historically provided long-term funding to specialized mortgage lenders. But legislative changes in the wake of the 1980s? thrift crises spurred the FHLBs to expand in both size and scope. For example, FHLB balance sheets now also include a substantial investment in mortgages and mortgage-backed securities, and the attendant interest rate risk has created financial and accounting difficulties at some of the FHLBs. ; Like Fannie Mae and Freddie Mac, the FHLB System is a government-sponsored enterprise that funds itself largely ...
Journal Article
Supervising bank safety and soundness: some open issues
This article identifies underresearched and/or underappreciated issues that affect bank safety and soundness or financial system stability. The author begins by discussing the goals of safety and soundness supervision and then focuses on seven imperfectly understood, and often intertwined, issues: credit rating agencies; the combination of banking and commerce; nationwide depositor preference and the distribution of liability-holders' risk exposures; systemic risk; capital adequacy; market discipline; and credible resolution procedures for the failure of large financial firms. Many of these ...
Working Paper
Market evidence on the opaqueness of banking firms' assets.
We assess the market microstructure properties of U.S. banking firms' equity, to determine whether they exhibit more or less evidence of asset opaqueness than similar-sized nonbanking firms. The evidence strongly indicates that large banks (traded on NASDAQ) trade much less frequently despite microstructure characteristics. Problem (noncurrent) loans tend to raise the frequency with which the bank's equity trades, as well as the equity's return volatility. The implications for regulatory policy and future market microstructure research are discussed.
Conference Paper
Modernizing financial regulation (again)
"Modernized" financial firms are larger than traditional institutions, and they provide a broader range of services. These features blur the institutional distinctions which have formed the basis of prudential government supervision. Although the individual regulatory issues raised by modernization are not new, the pace and scope of these market changes may constitute a qualitative change in the ability of governments to guarantee financial system stability. Simply adapting current supervisory tools to a modernized environment is too "partial equilibrium" a solution. Instead, national ...
Conference Paper
Supervising bank safety and soundness: some open issues
Working Paper
The 2007-09 financial crisis and bank opaqueness
Doubts about the accuracy with which outside investors can assess a banking firm?s value motivate many government interventions in the banking market. The recent financial crisis has reinforced concerns about the possibility that banks are unusually opaque. Yet the empirical evidence, thus far, is mixed. This paper examines the trading characteristics of bank shares over the period from January 1990 through September 2009. We find that bank share trading exhibits sharply different features before vs. during the crisis. Until mid-2007, large (NYSE-traded) banking firms appear to be no more ...
Working Paper
Comparing market and supervisory assessments of bank performance: who knows what when?
We compare the timeliness and accuracy of government supervisors versus market participants in assessing the condition of large U.S. bank holding companies. We find that supervisors and bond rating agencies both have some prior information that is useful to the other. In contrast, supervisory assessments and equity market indicators are not strongly interrelated. We also find that supervisory assessments are much less accurate overall than both bond and equity market assessments in predicting future changes in performance, but supervisors may be more accurate when inspections are recent. To ...