Working Paper
Did FDICIA enhance market discipline on community banks? a look at evidence from the jumbo-CD market
King, Thomas B.; Vaughan, Mark D.; Meyer, Andrew P.; Hall, John R. (2002)
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) directed the FDIC to resolve bank failures in the least costly manner, shifting more of the failure-resolution burden to jumbo-CD holders. We examine the sensitivity of jumbo-CD yields and runoffs to failure risk before and after FDICIA. We also examine the economic significance of estimated risk sensitivities before and after the Act, looking at the implied impact of risk on bank funding costs and profits. The evidence indicates that yields and runoff were sensitive to risk before and after FDICIA, but that this ...
Supervisory Policy Analysis Working Papers , Paper 2002-04

Journal Article
The housing giants in plain view
Yeager, Timothy J.; Vaughan, Mark D.; Emmons, William R. (2004-07)
These government-sponsored enterprises continue to make headlines because of their explosive growth and resulting heavyweight status within the nation's financial system.
The Regional Economist , Issue Jul , Pages 4-9

Journal Article
Loan quality in the Eighth District: worth a closer look
Stojanovic, Dusan; Vaughan, Mark D. (1996-07)
The Regional Economist , Issue Jul , Pages 12-13

Journal Article
The role of supervisory screens and econometric models in off-site surveillance
Meyer, Andrew P.; Vaughan, Mark D.; Gilbert, R. Alton (1999-11)
Off-site surveillance involves using financial ratios to identify banks likely to develop safety-and-soundness problems. Bank supervisors use two tools to flag developing problems: supervisory screens and econometric models. Despite the statistical dominance of models, supervisors continue to rely heavily on screens. We use data from the 1980s and 1990s to compare, once again, the performance of the two approaches to off-site surveillance. Our study explicitly addresses supervisors' criticisms of econometric models. In particular, we offer a new econometric model - one designed to forecast ...
Review , Volume 81 , Issue Nov , Pages 31-56

Working Paper
Should the FDIC worry about the FHLB? The impact of Federal Home Loan Bank advances on the Bank Insurance Fund
Bennett, Rosalind L.; Yeager, Timothy J.; Vaughan, Mark D. (2005)
Does growing commercial-bank reliance on Federal Home Loan Bank (FHLBank) advances increase expected losses to the Bank Insurance Fund (BIF)? Our approach to this question begins by modeling the link between advances and expected losses. We then quantify the effect of advances on default probability with a CAMELS-downgrade model. Finally, we assess the impact on loss-given-default by estimating resolution costs in two scenarios: the liquidation of all banks with failure probabilities above two percent and the liquidation of all banks with advance-to-asset ratios above 15 percent. The evidence ...
Working Paper , Paper 05-05

Working Paper
Can feedback from the jumbo-CD market improve bank surveillance?
Meyer, Andrew P.; Vaughan, Mark D.; Gilbert, R. Alton (2003)
We examine the value of jumbo certificate-of-deposit (CD) signals in bank surveillance. To do so, we first construct proxies for default premiums and deposit runoffs and then rank banks based on these risk proxies. Next, we rank banks based on the output of a logit model typical of the econometric models used in off-site surveillance. Finally, we compare jumbo-CD rankings and surveillance-model rankings as tools for predicting financial distress. Our comparisons include eight out-of-sample test windows during the 1990s. We find that rankings obtained from jumbo-CD data would not have improved ...
Working Papers , Paper 2003-041

Journal Article
Is federal home loan bank funding a risky business for the FDIC?
Stojanovic, Dusan; Yeager, Timothy J.; Vaughan, Mark D. (2000-10)
Easy access to FHLB funds has helped community banks stay afloat in today's competitive markets, but could pose a risk to the FDIC's insurance fund.
The Regional Economist , Issue Oct , Pages 4-9

Journal Article
Deposit insurance reform
Wheelock, David C.; Vaughan, Mark D. (2002-10)
In the cover story, find out why some bankers are encouraging Congress to raise the ceiling for insurance on deposits to $130,000 from $100,000 per account. Opponents point out that in the wake of the last increase, the S&L crisis occurred.
The Regional Economist , Issue Oct. , Pages 4-9

Journal Article
The two faces of banking : traditional loans and deposits vs. complex brokerage and derivative services
Poposka, Klimentina; Yeager, Timothy J.; Vaughan, Mark D. (2004-10)
The Regional Economist , Issue Oct

Journal Article
Jumbo CDs play tiny role in policing risky banks ... so far
Vaughan, Mark D.; Meyer, Andrew P.; King, Thomas B.; Hall, John R. (2002-07)
Reforms enacted after the S&L crisis have yet to persuade holders of jumbo CDs to monitor their banks' risky practices.
The Regional Economist , Issue Jul. , Pages 12-13