Tagged: Mark Williams

Northeast to buy NStar

October 18th, 2010 in Energy 0 comments

Northeast Utilities, a Connecticut-based energy supplier, announced that it will purchase Boston-based NStar for $4.3 billion in stock. The merger will form a company with 3.5 million electric and gas customers in Massachusetts, Connecticut, and southern New Hampshire. SMG finance lecturer and an energy risk-management expert Mark Williams comments on the deal.

“Northeast Utlilities announcement to buy NStar for a whopping $4.3 billion is a further sign of consolidation that is happening in the U.S. utility industry. A main driver for this merger is reduction of overlapping cost structures. Providing energy services is increasingly a commodity business yet the twist is that utilities have monopolistic power. This power, and the ability to set price, is only countered by strong state public utility commissions. Its role is to make sure consumers receive dependable power at a fair price.

“The announced merger of Northeast and NStar could provide consumers with cost savings, but it will depend on the strength and ability of public utility commissions to advocate for rate paying consumers.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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AIG repayment plan

September 30th, 2010 in Banks 0 comments

American International Group announced they have finalized a repayment plan with the Treasury Department. Mark Williams, a former Federal Reserve Bank examiner who now teaches finance in the School of Management and author of “Uncontrolled Risk” about the fall of Lehman Brothers, offers the following view.

“The Treasury would be jumping the gun by cashing out of AIG and leaving money on the table. The government should sit tight, be patient and not sell its shares in AIG. This is not about government timing the market, but about insuring a fair return for taxpayers.

“The Treasury is making the same mistake it did with Citigroup – getting out too early. Could the November election cycle be clouding what should be a purely financial decision?”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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Goldman executives questioned

July 1st, 2010 in Banks 0 comments

Financial Crisis Inquiry ComissionThe Congressionally appointed Financial Crisis Inquiry Commission exploring the 2008 crash questioned executives from Goldman Sachs, the world’s most profitable bank, about how much it makes trading derivatives — those complex financial bets that helped bring down the economy.  Goldman Chief Financial Officer David Viniar said they had no way of determining its derivatives data separately from trading in cash securities. But Mark Williams, a former Federal Reserve bank examiner who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says he doesn’t buy it.

“For Goldman’s CFO to go before the Financial Crisis Inquiry Commission and claim he doesn’t know what Goldman makes in derivatives trading is the equivalent of a major league pitcher not knowing his ERA.  Such a claim is shocking given how lucrative and central derivatives trading is to Goldman’s core business model.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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AIG bill still hitting taxpayers

June 10th, 2010 in Banks 0 comments

AIG logoThe Congressional Oversight Panel says in a scathing report that the government failed to exhaust all options before bailing out the insurance giant American International Group — although the rescue did help the financial system avert collapse.  Nonetheless, the watchdog panel says taxpayers may never be paid back all of the $182 billion funneled to support AIG.  Former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says the report speaks to the elevated role that policymakers have in conducting stronger risk management.

“Taxpayers deserve better decision making that incorporates basic risk-management tools, including risk measurement, worst-case forecasting, monitoring, and frequent reporting. With significantly more taxpayer money at risk, now it is time for policymakers to exercise better risk management.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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Financial regulatory reform crunch time

May 24th, 2010 in Banks 0 comments

U.S. Capitol buildingCapitol Hill negotiators from the House and Senate committees dealing with financial regulatory reform are getting down to the details of working out differences between the bills passed in respective chambers, with Democrats holding the majority votes in both.  Former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says the Fed simply isn’t equipped to take on any new oversight role over banks — as the Senate bill dictates.

“At the Fed, bank examiners continue to be underpaid, lack advanced training in the ways of Wall Street, and are saddled with risk-measurement systems that lag the Street.”

Contact  Mark Williams, 617-358-2789, williams@bu.edu

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Congress close to financial reg reform

May 21st, 2010 in Banks 0 comments

bankrollThe most extensive overhaul of financial regulations since the 1930s has cleared its big hurdle in the U.S. Senate and how can head to President Obama for a signature after a conference committee works out remaining differences between the House and Senate versions.  But former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, cautions that only four of the world’s 30 global financial giants that could take down the world’s economy are covered under this reform bill — yet the problems are globally systemic.

“The U.S. is now in the position to lead again but will need to encourage other nations to follow.  Until global uniformity is reached, high systemic risk will remain.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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German trading ban roils markets

May 19th, 2010 in Economics 0 comments

bond salesBecause no one followed suit, Germany’s unlateral ban on “naked” short selling of European government bonds – speculative bets that prices will fall on borrowed assets which then can be sold back to the lender with the speculator pocketing the difference –rocked global markets.  Mark Williams, who teaches finance at the BU School of Management and is author of “Uncontrolled Risk” about the lessons to be learned from the fall of Lehman Brothers, says this shows that systemic risk remains high in our global financial market.

“Short sellers are a symptom not the cause of our fragile financial system.  The action that will be most effective is coordinated efforts by G-20 powers to enact a global financial reform.  Efforts being made in the U.S. will not solve the systemic risk that Greece has reminded us still exists.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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Greece's debt crisis grows

May 5th, 2010 in Banks 0 comments

Greek debt crisisAs nationwide workers’ strikes continued and deadly riots erupted in Athens over austerity measures invoked to deal with Greece’s ongoing debt crisis, fears grew that the situation may adversely impact the global banking system.  Mark Williams, author of “Uncontrolled Risk” about the fall of Lehman Brothers who teaches finance in the School of Management, says the risk will remain high until meaningful financial reform is enacted globally.

“If the stunning collapse of world markets after the Lehman Brothers bankruptcy in September 2008 was the wakeup call [about uncontrolled risk in the banking system], the unraveling of Greece and potentially other sovereigns (Spain, Portugal, Italy) is the latest alarm bell.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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