From Financial Services Roundtable
October 14, 2013
Perspectives on Human Security and Development
Thursday, October 10th
10:00Am – 11:30AM
Location: Hotel Commonwealth
500 Commonwealth Avenue
Featuring Keynote Speaker Dr. Atiur Rahman, Governor of the Bangladesh Bank. More
September 22, 2013
(NECN) – Peter Howe and Paul Guzzi of the Greater Boston Chamber of Commerce discuss the fifth anniversary of the financial crisis. In many ways, we have recovered remarkably as the stock market has hit record highs and most of the bailout money repaid with some profits.
Cornelius “Con” Hurley of Boston University’s Center for Finance, Law and Policy says that while progress has been made, we still have a ways to go.
Watch the video at NECN.com.
From American Banker
By Barbara A. Rehm
July 24, 2013
Ending “too big to fail” may be the single public policy goal that everyone in financial services agrees on.
Obama administration officials, federal regulators, lawmakers from both parties, even executives at the largest banks are united: the government shouldn’t ride to the rescue every time a giant financial firm falters.
But five years beyond the crisis few people are convinced the 2008 bailouts won’t be repeated.
Many, myself included, put a lot of faith in Dodd-Frank’s Orderly Liquidation Authority, which mandates insolvent behemoths should be taken over and unwound by the government.
But the Federal Deposit Insurance Corp. seems to have hit a wall in its OLA implementation, stuck waiting for the Federal Reserve Board to adopt a rule requiring long-term holding company debt that could be converted into equity in a resolution.
Fed officials are convinced that if they can only layer enough capital requirements onto the largest banks and gradually crank these ratios higher, the companies will conclude it’s in their best interest to shrink.
But will they? Bankers tell me their companies have zero interest getting below $700 billion, the new threshold for lower capital levels adopted this month. First, it would take forever to do this organically and, second, asset sales of that scale would never be approved by regulators for fear they would be making some other bank “too big.”
The largest banks also are convinced they will be able to live with whatever capital rules the government concocts. “We will find a way to earn a [market] return on our capital,” one banker told me.
All this leads me to think that trying to solve TBTF through capital is not as simple as we’d all like.
Besides, capital rules themselves are becoming a mess. We are well on our way to a dozen separate ratios or surcharges and several different ways to calculate a capital ratio’s denominator. No one can even explain how the “new” leverage ratio adopted this month relates to the old one. And honestly no one knows how much capital is “enough” or whether all these new rules will simply push risk out of the regulated financial system.
That’s enough to convince me we ought to at least consider other options.
International Education Program in Economics Journalism
ImpactMedia is an international education pilot of the Foundation for Effective Governance created to foster quality economics journalism in Ukraine.
The key idea is providing access to top-notch international training in the area of economics journalism to Ukrainian reporters and editors.
ImpactMedia resulted from a series of discussions with Ukrainian editors and media experts, who helped to identity the educational needs of Ukrainian journalists.
ImpactMedia is based on the world’s best practices. Representatives of leading international journalism schools and universities, such as Missouri School of Journalism, Boston University College of Communications, Harvard Kennedy School, and Oxford University, provided invaluable input into the design of this program.
The pilot consists of 4 modules t hat will take place in Kiev from July through November of 2013. The duration of each module is 1 week. The program format is intensive interactive seminars. The official start is July 1st, 2013.
Over 15 leading foreign journalists and experts in economics, business, and finance will be the ImpactMedia coaches . A group of 20 Ukrainian journalists will be competitively selected by international admissions committee to participate in the program.
Program participants will have an opportunity to strengthen their journalism skills , access cutting-edge knowledge in the topics of economics, business, and finance relevant to Ukraine, and learn about the best practices for covering these topics.
The Program will also include a series of discussions with key stakeholders in Ukraine’s economic development and top managers of the largest companies in the country.
Professor Louis Ureneck and Professor Cornelius Hurley are program participants.
From the Financial Times.
We should have learnt by now that capital ratios, whether risk-weighted or leverage, are not the cure for systemic risk.
The market knows that it’s not by measuring capital that we determine the systemic riskiness of a company – it’s by measuring the subsidy the company receives for being so risky that it has to be underwritten by the government.
The answer to the too big to fail problem is not to pin the tail on the capital donkey but, rather, to acknowledge and measure the subsidy and then to let the markets speak. At this time, the US General Accountability Office is in the thick of a study quantifying the subsidy.
To be sure, capital has its place in the regulator’s toolbox. But as a means for stemming systemic risk that tool is woefully inadequate as has been demonstrated repeatedly over the years. We do not have to live between the Scylla of economic stagnation caused by banks with bloated capital levels and the Charybdis of financial meltdowns of our largest institutions.
Cornelius K Hurley, Director, Boston University Center for Finance, Law & Policy, Boston, MA, US
CAS economics class teaches key life lessons
From BU Today
By Leslie Friday
June 14, 2013
The course description for Aaron Stevens’ economics class should read: “Take this and you’ll be prepared for every decision you make from now until death.” That may be a tad dramatic, but it’s not far off base, considering that students learn how to use applied economics to make decisions on spending, saving, borrowing, choosing careers, marriage, reproduction, and retirement. And that’s just the short list.
“The economic system has grown up without a specific plan for educating people how to get a fair shake and get the best deal,” says Stevens, a College of Arts & Science lecturer in economics and computer science, who wrote the class’ eponymous text, Personal Life Cycle Economics. “If you can help people understand the process, then the life cycle model is the clear way to do this decision-making.”
Read the full article at BU Today.
Chinese finance is more in tune with what Latin America wants, rather than what western development experts say it needs
From The Guardian
By Kevin Gallagher
May 30, 2013
The Chinese president, Xi Jinping, travels to the US and Latin America this week, for the first time since he took office in March. What a difference a decade makes. Ten years ago, there would hardly have been any fanfare about a Chinese visit to the region. Now, for Brazil, Chile and others, China is the most important trade and investment partner. China-Latin America trade surpassed $250bn (£165bn) last year.
Although China’s impact in Africa receives the most attention, China trades just as much in Latin America as in Africa, and has more investments in the region. Chinese finance in Latin America – chiefly from the China Development Bank and the Export-Import Bank of China – is staggeringly large and growing. In a recently updated report, colleagues and I estimate that, since 2005, China has provided loan commitments of more than $86bn to Latin American countries. That is more than the World Bank or the Inter-American Development Bank have provided to the region during the same period.
China’s presence is a great opportunity for Latin America, but it brings new risks. If the region can seize the new opportunities that come with Chinese finance, countries could come closer to their development goals, and pose a real challenge to the way western-backed development banks do business. However, if Latin American nations don’t channel this new trade and investment toward long-term growth and sustainability, the risks may take away many of the rewards.
Read the full article at Guardian.co.uk.
New York, New York: The finest law firm writers of 2013 have been announced by the Burton Awards, a non-profit program, which is run in association with the Library of Congress. The thirty winners were, once again, chosen from the nominations submitted by the nation’s top 1,000 most prestigious and largest law firms.
The fourteenth annual Burton Awards event will be held at the Library of Congress on June 3, 2013. The program was established to honor the greatest achievements in law. This year, U.S. Supreme Court Justice Sonia Sotomayor will be presented with the “Contemporary Book of the Year in Law Award” during the awards ceremony. A predinner reception, Gala and performance by Grammy, Emmy and Tony Award nominee Vanessa Williams will follow.
The Academic Board, which reviewed articles published within the past year, was led by Virginia Wise, Harvard Law School; Anne E. Kringel, University of Pennsylvania Law School; Grace Tonner, University of California Law School at Irvine; Judge Ed Forstenzer, California’s Superior Court (retired); and William Ryan, former Chair of the White House Plain Language Committee.
Click here to see the winners and read more.
Click here to read the award’s letter.
Former Morgan Stanley chief regulatory lawyer named director of graduate program
Boston University School of Law is pleased to announce that James E. Scott, the former chief regulatory counsel of Morgan Stanley and general counsel of Morgan Stanley Bank, N.A., has been named director of the Graduate Program in Banking & Financial Law, effective May 15.
Scott brings to BU Law over 30 years of experience in the financial service industry. Prior to Morgan Stanley, he worked as in-house counsel for several other major banking organizations, including Citigroup, Bankers Trust Company, Bank of America Corporation and Security Pacific Corporation. He also served as senior counsel for the Board of Governors of the Federal Reserve System in Washington, DC. A member of the Banking & Financial Law Program’s adjunct faculty, he currently teaches a course in International Banking Structure and Regulation.
“We are delighted to welcome a new director with sterling professional credentials, extensive experience in the banking and finance world, and an already strong connection with BU Law,” says John Riccardi, assistant dean of graduate and international programs.
Scott joined Morgan Stanley after its decision to convert to a bank holding company in 2008. He served as the senior bank regulatory attorney for the firm during the four years after conversion, advising on banking policies and procedures, the scope of permissible activities for the firm in its new role, interaction with bank examiners and regulators and compliance, audit and other control functions. As general counsel of Morgan Stanley’s lead bank subsidiary, he also advised the board of the bank and its audit, management and compensation committees, including with respect to application of the Dodd Frank Act and accompanying regulatory reforms in the aftermath of the financial crisis.
“The events of the last five years have reshaped the substance and scope of financial services law and regulation to a greater degree than at any time since the Great Depression,” Scott says. “It is an exciting time for young lawyers to be starting a career in financial services law, and I am honored to be part of a program that is unique in the country in focusing on that type of legal career.”
In addition to teaching at BU Law, Scott has taught at the Law School of the University of California at Berkeley, Catholic University’s Columbus School of Law, and Pennsylvania State University’s School of Business. From 2005 to 2008, he chaired the Banking Law Committee of the American Bar Association. Scott earned a B.S. from Georgetown University School of Foreign Service and a J.D. from the University of Michigan Law School.
Boston University School of Law is a top-tier law school that offers a full-time J.D. degree and five LL.M. degree programs taught by professors recognized nationally as exceptional teachers and preeminent scholars. The Graduate Program in Banking and Financial Law, the oldest and only LL.M. program of its kind in the United States, has trained more than 2,000 lawyers for leadership positions in both domestic and foreign banking and financial services industries.