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Working Paper
The management of financial risks at German nonfinancial firms: the case of Metallgesellschaft
In late 1993 and early 1994, the wholly-owned U.S. subsidiary of a German conglomerate experienced substantial losses in connection with the implementation of a petroleum marketing strategy, triggering an emergency recapitalization of the German parent company. The rescue was overseen by the firm's supervisory board, which was chaired by a member of the senior management of the largest German bank. This paper draws on a special auditor's report that examined the near-bankruptcy of the firm, as well as other sources. We develop a case study which finds that the German bank was not well ...
Journal Article
U.S. bank exposure to emerging-market countries during recent financial crises
Global financial markets have experienced significant volatility in recent years, including financial crises in Asia in 1997 and in Russia in 1998. Emerging-market countries, in particular, were subject to sharp downward market moves. U.S. banking supervisors monitored these events carefully to determine the potential effect on U.S. banking organizations and paid particular attention to U.S. bank claims on emerging-market counterparties. Monitoring claims on emerging-market counterparties allows supervisors to identify any developing concentrations of risk that might warrant supervisory ...
Journal Article
Supervision of large complex banking organizations
The long-term trends of consolidation and innovation in the U.S. banking system have intensified over the past decade. A small number of banking organizations now hold a larger portion of the banking system's assets, and, at the same time, their activities have become more complex. As a result, the Federal Reserve has altered its approach to the supervision of the largest, most complex banking organizations (LCBOs). This new approach focuses on the most important risks facing U.S. banking organizations and the ways in which these risks are managed. This article discusses the Federal Reserve's ...