Policy session 1—Political Systems and Stability: Has Anyone Tamed the Tiger?
Various political systems establish laws and enforcement mechanisms to mitigate a variety of bank agency problems, including creditor-lender and owner-manager conflicts. These laws and mechanisms not only have a variety of distributional consequences within countries but also may have implications for their financial stability. This session examines whether the political systems of some countries produce financial systems that are fragile by design.
Presenter: Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia University [Presentation | Paper ]
Discussants: Gerard Caprio, William Brough Professor of Economics and Chair, Center for Development Economics, Williams College [Presentation ]
Matthew Kabaker, Senior Managing Director, Centerbridge Partners [Presentation ]
Moderator: Narayana Kocherlakota, President and CEO, Federal Reserve Bank of Minneapolis
Charles Calomiris interview
Policy session 2—Rules versus Discretion: Cages versus Obedience School
This session examines some of the trade-offs between various rule- or discretion-like approaches to regulation and the institutional details that shape implementation and impact efficacy. In this context, the panel will explore the role of policy uncertainty and its effect on market behavior; the regulatory dialectic in which market participants continually innovate around existing policy; the elicitation of truthful and useful information from market participants about activities and market practices; and the role of market discipline in achieving regulatory objectives.
Panel chair: Willem Buiter, Chief Economist, Citigroup
Panelists: Erik Sirri, Professor of Finance, Babson College
Jason Kravitt, Partner, Mayer Brown LLP
Andrew Haldane, Executive Director for Financial Stability, Bank of England [Remarks | Presentation ]
Willem Buiter interview
Andrew Haldane interview
Policy session 3—Stress Testing: Where's the Tail?
Value at risk (VaR) was the primary tool for banks and supervisors to measure risk prior to the financial crisis. The crisis revealed a number of flaws in VaR, and since the Supervisory Capital Assessment Program (SCAP) launched in 2009, the focus has now moved toward stress testing. However, as stress tests have assumed greater importance, their potential problems as risk measures have also become increasingly apparent. How then should financial institutions and their supervisors measure financial risk?
Presenter: David Rowe, Founder and President, David M. Rowe Risk Advisory [Presentation | Paper ]
Discussants: Til Schuermann, Partner, Division of Finance and Risk and Public Policy, Oliver Wyman [Presentation ]
Claudio Franzetti, Acting CEO and Chief Risk Officer, Swiss Export Risk Insurance [Presentation ]
Moderator: Markus Stricker, Director, Willis Economic Capital Forum, Georgia State University
David Rowe interview
Policy session 4—Resolution of SIFIs: How to Hold on to a Lashing Tail
The Federal Deposit Insurance Corporation (FDIC) has Dodd-Frank authorized administrative resolution if a bankruptcy is likely to have a systemic impact on the economy. This panel will consider some of the advantages and disadvantages of the FDIC's proposed approach relative to other ways of implementing its authority. It will also consider whether Congress should have created special judicial bankruptcy procedures for systemically important financial institutions (SIFIs).
Panel chair: Ron Feldman, Senior Vice President for Supervision, Regulation and Credit, Federal Reserve Bank of Minneapolis
Panelists: Eugene Ludwig, Founder and Chief Executive Officer, Promontory Financial Group
Arthur J. Murton, Director, Division of Insurance and Research, Federal Deposit Insurance Corporation [Presentation ]
Kenneth E. Scott, Ralph M. Parsons Professor of Law and Business Emeritus, Stanford University
Kenneth Scott interview
|Stress Testing Banks: What Have We Learned?
Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System [Text | Video ]
Simple Rules for Financial Stability
John Taylor, Mary and Robert Raymond Professor of Economics, Stanford University [Presentation ]
John Taylor interview
|Research Papers |
|Research paper 1—"Supervisory Stress Tests, Model Risk, and Model Disclosure: Lessons from OFHEO"
Paper presenter: Kris Gerardi, Financial Economist and Associate Policy Adviser, Federal Reserve Bank of Atlanta [Presentation ]
Discussant: Robert Van Order, Professor of Finance and Oliver T. Carr Professor of Real Estate, George Washington University
Moderator: Paula Tkac, Vice President and Senior Economist, Federal Reserve Bank of Atlanta
|Research paper 2—"Rational Blinders: Is It Possible to Regulate Banks Using Their Internal Risk Models?"
Paper presenter: Jean-Edouard Colliard, Economist, Financial Research Division, European Central Bank
Discussant: Craig Pirrong, Professor of Finance and Director, Global Energy Management Institute, Bauer College of Business, University of
Houston [Presentation ]
Moderator: Larry Wall, Director, Center for Financial Innovation and Stability, Federal Reserve Bank of Atlanta