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Editor Emeritus
Dr John Pattison
Editor
Ian Watson
Chief Sub-Editor
Fiona Plani
Commissioning Editor
Christopher Rogers
Editorial Standards Board
Dr Giovani Barone-Adesi, Dr Colin Lawrence, Luo Ping, Dr Patrick McConnell,
Dr Michael Ong, Dr John Pattison, William Ryback, Dr Kariya Takeaki, Simon Topping,
Dr Peter Treadway, Lawrence Uhlick and Dr Lawrence White.
Contributors
Dr Susan Ariel Aaronson, Mary Amiti , Olivier Blanchard, Prof Charles Calomiris,
Giovanni Dell’Ariccia, Prof Simon Johnson, James Kwak, Paolo Mauro, Michael Melvin,
Richard Neiman, Avinash Persaud, Alex J. Pollock, Patrick Raaflaub, Stephen S. Roach,
Gavin Sudhakar, Janet Tavakoli, Mark P. Taylor, Edwin M. Truman, Lord Adair Turner,
Prof. Kazuo Ueda, Gabe Shawn Varges, David Weinstein, Dr Janet Yellen.
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ISSN No: 2071-5455
Institute of Regulation and Risk – North Asia
5/F, Suite 502, Wing On Building, 71 Des Voeux Road, Central, Hong Kong
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Email: christopher.rogers@irrna.org
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JRRNA is published quarterly and registered as a Hong Kong journal. It is
distributed free of charge to governance, risk and compliance professionals in
China, Hong Kong, Japan, Korea and Taiwan.
Disclaimer: While every effort is taken to ensure the accuracy of the information herein, the editor
cannot accept responsibility for any errors, omissions or those opinions expressed by contributors.
Dr John Pattison
Editor Emeritus
Institute of Regulation & Risk – North Asia
5:15 PM Registration
6:00 PM Welcoming Remarks
Arthur Yuen, Deputy Chief Executive Office,
Hong Kong Monetary Authority (Invited)
6:15 PM What should central banking monetary policy focus on: Inflation or
deflation?
Dr. James Bullard, President & CEO, Federal Reserve Bank of St. Louis
6:30 PM Monetary policy and the medium-term outlook for price stability
Mr. Jurgen Stark, Member of the Executive Board, European Central Bank
6:45 PM From insider to outsider: Coping with a financial meltdown —
the good, the bad and the ugly
Sir John Gieve, former Deputy Governor,
Bank of England
7:00 PM Break
7:15 PM Panel Discussion and Audience Q&A
Moderator:
Robert Pringle, Chairman
Central Banking Publications
Panelists:
Dr. James Bullard
Mr. Jurgen Stark
Sir John Gieve
Mr. Takatoshi Kato, Deputy Managing Director
International Monetary Fund
8:30 PM Evening Meal & Beverages
10:00 PM End of Evening Dialogue
Acknowledgments
THE Secretariat of the Institute of Regulation and Risk – North Asia could not
have published this edition of the Journal without a great deal of assistance
and advice from professional associations, international monetary and finan-
cial bodies, regulatory institutions, consultants, vendors and, indeed, from the
industry itself.
A full list of those who kindly assisted would be impossible, but the Secretariat
would like to thank: the Federal Reserve Bank of Boston; the Federal Reserve
Bank of Chicago; the Federal Reserve Bank of New York; the Federal Reserve
Bank of San Francisco; the State of New York Banking Department; the Ameri-
can Enterprise Institute; The Peterson Institute, for International Economics;
the Swiss Financial Market Supervisory Authority (FINMA); the International
Monetary Fund; the Securities and Exchange Commission; the UK’s Financial
Services Authority; the University of Warwick, Loughborough University; Co-
lumbia University Graduate School of Business; George Washington University,
the Baseline Scenario; FinReg21; Voxeu; World Scientific; Barclays Global Inves-
tor; Morgan Stanley Asia; Blackrock; Sapling Solutions; Intelligence Capital and
Tavakoli Structured Finance for their kind permission to reproduce material and
articles from their respective publications and websites – much of which was
revised for the purposes of this Journal.
Detailed comments and advice on the text and scope of contents from Prof Wil-
liam Black, Robert Pringle, Dr Michael Ong, Dr Heong Wee Chong and Prof
Charles Calomiris were invaluable; we are also grateful to Ian Watson and Fiona
Plani of Edit24.com for their due diligence in setting out, editing and correcting
the text.
Special consideration must also be given to Dr. John Pattison once more for
taking time out from a hectic schedule to review all contributions within this
Journal and engage actively with all those who submitted papers and articles.
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Q&A
ON the evening of November 17, 2009, over and the worst downside risks to the US
some 400 guests assembled in Hong Kong economy have subsided substantially. We’re
to engage with Dr Janet Yellen, Sir John all breathing a sigh of relief and I think we
Gieve, Norman Chan and Jochen Sanio. have a growing economy.
Below is a transcript of the proceedings. There are many things to fret about in
terms of downside risk because some of the
Robert Pringle: We are honoured to be growth that we have seen during the last
joined by Mr Norman Chan, Chief Executive quarter, and probably through to the end of
of the HKMA. It is a pleasure that he’s cho- the year, rely on fiscal policy, a diminution of
sen to participate at this event – one of his inventory liquidation, and some government
first public engagements. programmes, like stimulus for auto pur-
I would like to start this Q&A session by chases that are temporary. So one can won-
inviting Dr Janet Yellen to say a few words der what will happen when some of these
about the macroeconomic situation and temporary impulses fade. Can the economy
outlook in the United States and the state of keep going on its own?
monetary policy of the Fed. To have a mem-
ber of the FOMC here in Hong Kong, I think Savings rate growth
we should give her the opportunity, if she I’m reasonably sanguine that the economy
would be so kind, to say a few words about can and will continue to grow into next year.
this first and then we can go into the ques- We’ve seen some strength in consumer
tion and answer session. Thank you. spending, maybe more than I would have
anticipated, given all the negative things that
Dr Janet Yellen: Thank you very much for have happened to households. And while I
that . . . I’ll try to be brief and we can take think that the savings rate is going forward,
follow-up questions if you have some. Let American consumers will end up saving
me just summarise by saying that while more and so consumer spending growth
it’s not yet official, the recession is probably will be more sluggish than we saw in the
Sir John Gieve: Just three points in response Robert Pringle: Thank you very much.
to Norman and Janet. Firstly, we’ve thrown Jochen, do you have anything to add on this
everything at it because we thought there point?
was a real risk that we were going into not
just a recession but a depression. And it’s not Jochen Sanio: I’d feel quite comfortable if
been an operation, certainly in the UK, where you don’t press me on monetary matters,
we’ve known how much is enough. We just which to me sometimes as a supervisor
did everything we could in order to stop a looks like a random walk, and that’s some-
downward spiral and obviously stopping thing that is difficult to cope with. I think
this downward spiral is pretty important to one thing that is sure for us is that the law
Asia too, because you need our consumers. of unintended consequence applies eternally
My own view is that we’re coming to the and, as John just pointed out, in these mat-
end of adding to any quantitative easing.You ters I think it’s still the old principle of eve-
will see that there’s been a deceleration in rybody on their own and then you have to
the US and the UK. I don’t know quite when look for the side-effects. You could ask me
it will come to an end, but I think that we’re the question, which is among my half-dozen
coming to an end of that phase. The other unanswerable questions. How can we react
point is that one way of responding, and to this? I’m not an expert in the Hong Kong
Sir John Gieve: Picking up on Robert’s point Eugene Yip, Morgan Stanley: I have a ques-
about whether or not we’re going to see a tion for Norman Chan. It is my understand-
return to financial protectionism and capital ing that interest rates are trending towards
constraints. The most striking thing about the level of growth in the economy, yet
this crisis – which is very different from the because of the US dollar/Hong Kong dollar
1930s crisis – is that I don’t think there is any peg, you cannot raise rates in Hong Kong
What caused the French Revolution? of 2008-2009 has subsided; people no longer
People have been arguing that ques- fear the imminent collapse of the global
tion for centuries. Since 1789, believers financial system as a whole.
in the march of freedom and progress Although the world economy still
have seen the Revolution as a victory of faces serious threats, we have moved from
the principles of Enlightenment over the responding to the financial crisis to arguing
superstition of the “ancien régime”. about it. And this is not merely an academic
discussion; each explanation of the crisis
Yet one precipitating cause of the revolts of implies different policy lessons, and so the
1789 was high grain prices caused by the continuing debate over the crisis is inher-
poor harvests of the preceding year. Alexis ently political.
de Tocqueville saw the Revolution as a col-
lision between the rising aspirations of the Apportioning blame
middle class and the rigidity of the existing Several early books about the crisis focused
political structure. Karl Marx saw the over- on the key figures involved and the actions
throw of the aristocracy by the bourgeoisie, they took in the heady days of 2008; these
an ineluctable historical process driven by narratives reflect the view that the decisions
changes in the mode of production. The of key people are sufficient to explain what
debate continues to this day, with each gen- happened. However, many other explana-
eration giving its own answer to the ques- tions have been advanced. Some people
tion and interpretation of issues. blame the financial crisis on ‘global imbal-
Major historical events are almost always ances’ (code for China); on this theory,
over-determined. They are caused and Chinese over-saving forced the United
shaped by multiple forces, many of which States to accept a flood of cheap money,
may be necessary for the event, but none of which necessarily created a bubble.
which is alone sufficient. The recent financial The implication is that we need to pres-
crisis is no exception. Today, the acute panic sure China to let its currency appreciate. A
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IF a driver, high on crack cocaine, crashed they borrowed many multiples more than
his speeding rental car into your house they could afford. Wall Street pumped the
and killed your spouse, you would be Fed’s cheap money through financial ‘meth
outraged if law enforcers took bribes and labs’ and deceptive financial vehicles ran
gave the driver a pass on a blood test. If over securities laws at top speed.
a judge merely fined the killer and then More than 20 per cent of mortgage loans
ordered you to pay the fine, you would – including what were originally considered
appeal, wondering what had happened to be sound loans – are underwater, meaning
to justice. If the government then handed that the borrower owes more than the home
the same driver the keys to a bigger rental is worth. Official unemployment numbers
car and presented you with the bill, you hover at around 10 per cent. If you include
would certainly protest. underemployment, this figure escalates to a
whopping 18 per cent.
How is it, then, that you have remained
largely silent in the face of the same sort of Destitute group
behaviour by Wall Street and Washington? In depressed areas where the nation’s poor-
Bonus-seeking bankers careered off the est reside (chiefly from minority groups);
right path and ran Ponzi schemes that nearly people have been hurt the most. In these
ruined our economy. Bureaucrats and elected areas, unemployment has soared past 30 per
officials bailed them out without demanding cent. For this largely destitute group, unem-
consequences. And bankers are revving up ployment combined with underemploy-
their engines again. ment exceeds 50 per cent.
Taxpayers are asked to believe that over- As US soldiers fought wars in Iraq and
borrowing by US consumers created a global Afghanistan, Wall Street flattened Main
financial crisis; this myth aids and abets Wall Street. Our foreign wars drag on, while the
Street. The economy was nearly destroyed US continues to battle a crippling recession
because banks borrowed massively, and back home.
Reprints Available
Winter 2009
-2010
Issues in reso
lving syst
emically imp
Resecuritisat ortant fina
ion in bank ncial insti
ing: major tutions
A framewo challenges Dr Eric S. Rosen
rk for fund ahead gren
ing liquidity
Housing, in times of
monetary financial crisi Dr Fang Du
and fiscal s
Derivativ polic ies: from bad
es: from disa to worst Dr Ulrich Binds
ster to re-re eil
Black swa gulation
ns, market Stephan Schoe
crises and ss,
Measuring risk: the hum Professor Lynn
& managin an perspect A. Stout
g risk for ive
Red star span innovativ
e financia Joseph Rizzi
gled bann l instrume
er: root caus nts
The ‘family’ es of the fina Dr Stuart M.
risk: a caus ncial crisi Turnbull
e for conc s Andreas Kern
Global fina ern among & Christian
ncial chan Asian inve Fahrholz
ge impacts stors
The scrambl complian
e is on to tack ce and risk David Smith
le bribery
Who exac and corrupti
tly is subj on David Dekker
ect to the
Financial Foreign Corr Penelope Tham
markets rem upt Practices & Gerald Li
uneration Act?
Of ‘Black reform: one
Swans’, stres step forw Tham Yuet-M
s tests & ard ing
optimised Umesh Kuma
Contact
Challenging risk managem r & Kevin Marr
the value ent
of enterpri
Rocky road se risk man
ahead for agement David Samu
els
global acco
The Asian untancy conv Tim Pagett
regulator ergence & Ranjit Jaswa
l
y Rubik’s
Cube
Christopher Rogers
Dr Philip Goeth
Alan Ewins
and Angus
Ross
General Secretary
christopher.rogers@irrna.org
A failure of credibility
undermines future of the WTO
George Washington University academic
Susan Ariel Aaronson calls on the global
trade body to bare its teeth to China.
IS the WTO doomed? This column argues market, and the world’s leading provider of
that the World Trade Organisation’s cred- manufactured goods. China’s regulatory and
ibility is waning and that to get it back it trade practices can move global markets.
needs to rein in China’s erratic govern- There is no doubt China’s growth has led
ance. Beijing’s failure to enforce trade to global growth. Chinese demand for raw
laws threatens the concept of mutual goods and materials have created jobs. The
benefit that underpins the WTO. China World Bank notes that the efficiency and
is broken, and a broken China could scale of China’s manufacturing has pushed
break the WTO. down the price of many manufactured
products relative to other goods and services
The year 2010 could be a daunting one for (Commission on Growth 2009). Investors,
the WTO. Many observers believe it is con- consumers, and taxpayers have benefited
demned to irrelevance if it does not find from these developments.
common ground among its 153 member
states on the Doha Round – now in its 10th Inadequate governance
year. Many of these same countries bypass But China’s competitive advantage is to some
the WTO as they seek to expand trade. As degree based on its inadequate governance;
an example, WTO members completed its failure to enforce its own laws in a trans-
some 25 new preferential trade agreements parent, even-handed manner. As part of its
in 2009, bringing the total of such bilateral or accession to the WTO, however, China was
regional agreements to 186. required to enforce the rule of law through-
But the WTO’s most difficult challenge out all of its territories. China’s political econ-
may be to discipline trade relations among omy has two key attributes: authoritarian
China and other WTO member states. China governance and inadequate governance. At
today is now the world’s third-largest trading the national level, the Communist Party sets
nation, the world’s largest recipient of invest- the rules, yet it is sometimes willing to ignore
ment, the world’s fastest growing consumer its international commitments in order to
FINANCIAL crises not only impose rise to a raft of changes in bank regulations,
short-term economic costs, they also most of which were subsequently discred-
create enormous regulatory risks. The ited by economists and economic histori-
financial crisis that has been gripping the ans as counterproductive and destabilising
global economy for the past two years is (Calomiris 2000). Since the 1980s, the US
already inspiring voluminous proposals has been removing many of the regulatory
for regulatory reform coming from all missteps that arose out of the financial col-
quarters. Previous financial crises – most lapse of the Great Depression, by allowing
obviously the Great Depression – have banks to pay market interest rates on depos-
usually brought in their wake significant its, operate across state lines, and offer a
financial regulatory changes. wide range of financial services and products
to their customers (which has diversified
Some crises breed sensible reforms. For banks’ sources of income and improved the
example, in the United Kingdom, policy efficiency of bank services to clients).
reforms in the 1850s and 1860s that changed
the rules governing Bank of England assist- Permanent policies
ance to distressed banks (effectively ending It is worth remembering how long it took for
the bailout of banks during crises) had enor- unwise regulatory actions taken in the wake
mous consequences for incentives toward of the Depression to be reversed. Indeed,
risk-taking, which stabilised the financial some regulatory policies introduced during
system dramatically; Britain had experienced the Depression – most obviously, deposit
severe banking panics in 1825, 1836, 1847, insurance – will likely never be reversed,
1857, and 1866, but (with the exception of despite the fact that financial economists
the upheaval in 1914 as the world prepared and economic historians regard the adverse
for World War I) none for more than a cen- incentive consequences of deposit insurance
tury afterward (Calomiris 2009a). (and other safety net policies) as the pri-
The Great Depression, in contrast, gave mary source of the unprecedented financial
worried that the US was overdue for a based on a false extrapolation of the past into
housing price decline, partly because of the the future:“We are less likely to get the house
extremely positive performance of the 1990s price appreciation we’ve had in the past l0
and early 2000s. David Andrukonis, a risk years to bail this programme out if there’s a
manager at Freddie Mac, recognised in his hole in it.”2
April 5, 2004 letter to a superior that the reli- By “this programme” he was refer-
ance of underwriters on house price appre- ring to the proposed entry of Freddie Mac
ciation to “bail out” subprime lenders was into no-docs lending on a large scale. The
SENSELESS
PANIC
H O W WA S H I N G T O N FA I L E D A M E R I C A
W I L L I A M M . I S A AC
with P H I L I P C . M E Y E R
Debate
IN the Fall of 2009, the Federal Reserve about what happened to cause the recent
Bank of Chicago, in conjunction with the crisis.” I agree and would add that doing so
World Bank, organised its 12th annual is equally important with respect to other
symposium – The International Financial lessons that should affect policies but might
Crisis: Have the Rules of Finance Changed? not necessarily rise to the level of reforms
A number of academics, central bankers, requiring Congressional action, for example
economists and government advisers monetary policy.
delivered a series of lectures and papers
focusing on the origins and consequences Multiple points of view
of the financial crisis and remedies to There is no paucity of potential candidates
mitigate against further occurrences. The who postulate the root causes of the crisis
previous paper, by Charles W. Calomiris, of 2007-09. The number is probably larger
gave one perspective on the origins of than the four or five presented in Calomiris’
the subprime crisis which the Peterson article, or the four or five largely implicit in
Institute for International Economics’ the Mussa chapter, and less than the 10 or
Edwin M. Truman fundamentally disa- 12 presented in the Baily-Elliott chapter.
greed with. Below is an edited transcript However, the intersection of these lists of
of Mr Truman’s discourse. causes is essentially a null set aside from a
common theme of the housing boom.
Mr Truman …It is is a pleasure to partici- These observations illustrate the reality
pate once again in an International Banking that even today, more than two years after
Conference at the Federal Reserve Bank of the crisis broke in August 2007, and essen-
Chicago. tially there is no agreement about the root
Charles Calomiris wrote in his article causes. This is unfortunate if we want to
(see previous paper in this journal): “It is learn the lessons and apply this learning to
important, therefore, in the interest of shap- policy reform; but it gives me free reign in my
ing desirable reform, to get our story straight commentary.
IN this paper, I will try to lay out some monetary policy and the performance of the
broad themes concerning the implica- macroeconomy depend greatly on main-
tions of the financial crisis for regulatory taining a stable and healthy financial system.
reform and monetary policy. My com- And a sound economy makes the work of
ments are my own and do not necessarily regulators much easier because economic
reflect the views of my colleagues in the downturns put considerable stress on the
Federal Reserve. financial system. In addition, the insights
we derive from our supervision of bank-
In the past, monetary and regulatory poli- ing organisations are helpful in formulating
cies have generally been viewed as separate monetary policy. And the economic analysis
domains with distinct objectives. The pri- that underpins monetary policy improves
mary focus of monetary policy has been on our understanding of the risks confronting
attaining the macroeconomic goals of low financial institutions. Nonetheless, policy-
inflation and a stable economy. In the United makers have generally viewed monetary and
States, these goals find their expression in the regulatory questions as separate disciplines,
Federal Reserve’s dual mandate of maximum and we have designed our strategies and
employment and price stability. By contrast, carried out our policies accordingly.2
regulatory policy has generally pursued sig-
nificantly different ends: protecting the safety Important implications
and soundness of individual financial institu- The painful events of the past two years have
tions and reducing systemic risk. fundamentally challenged this dichotomisa-
Of course, monetary and regulatory tion of monetary and regulatory policies. It is
policies do not exist in total isolation and no longer obvious that setting policies to sta-
the Federal Reserve, an institution with bilise the economy on the one hand and to
responsibilities in both domains, has long safeguard the financial system on the other
recognised some important linkages. For can be cleanly separated – either in concep-
example, it’s clear that the effectiveness of tion or implementation.3 This experience has
UNDER the auspices of the US Congress, undoubtedly has considerable merit, it may
the newly constituted Financial Crisis not be enough to prevent another crisis from
Inquiry Commission (FCIC) held its occurring in the not-so-distant future. In my
first hearings in Washington on January opinion, also needed is a major reworking of
13-14 this year. Established by Congress the mandate that guides the role and con-
in the aftermath of the bankruptcy of duct of monetary policy.
Lehman Brothers, its function is reminis- Specifically, the addition of a finan-
cent of congressionally-sponsored hear- cial stability mandate could go a long way
ings held in 1932 by the so-called Pecora in forcing central banks to face up to the
Commission. destabilising perils of asset bubbles and the
imbalances they have spawned in the mix of
As was the case some 78 years ago, the global saving as well as on the real side of
current generation of Wall Street captains increasingly asset-dependent economies.
was grilled on the specifics of the Great Crisis
of 2008-09. Like earlier times, this high-pro- No silver bullet
file exchange could well be a key to driving There is no quick fix in a post-crisis world
legislation that could shape the US financial – no silver bullet that would inoculate an
system – and an asset and debt-dependent ever-changing world from the next inevita-
US economy – for generations to come. ble crisis. However, the world can surely do
a much better job of crisis prevention that it
Twin concerns did in the free-wheeling decade before the
The early betting is that post-crisis remedies onset of the sub-prime crisis in the summer
will be concentrated in a new approach to of 2007.
regulatory oversight – specifically the impo- Significantly, it should avoid a backward
sition of new“macro-prudential”regulations looking fix that addresses the problems that
aimed at the twin concerns of systemic risk gave rise to this most recent crisis. A myopic
and financial stability. While this approach approach would invariably miss the excesses
FED FUNDS
DATE TARGET
12
-4
-8
71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
Source: Haver Analytics, Morgan Stanley Research
RARELY does a supervisory author- local industry players, politicians and the
ity have an opportunity to rethink its public. A variety of considerations – among
fundamental mission and approach. others a desire to configure a well-posi-
This is an opportunity which we at the tioned supervisory authority that is more
Financial Market Supervisory Authority able to deal with cross-sectoral issues and
(FINMA), Switzerland’s new integrated with more complex and internationally
financial services regulator, are currently active players – led to the approval of the
having and which we highly value. recommendation to put under one roof the
banking/securities, insurance, and money
The materialisation of this opportunity is laundering authorities.2 Previously, these
taking three main forms: First, how do we authorities were separate even though
define who we are and what we wish to good co-operation existed among them.
accomplish? Second, what do we expect
of the companies that we supervise? Third, Twist of history
how do we go about carrying out our regu- It is an interesting twist of history that the
latory and supervisory work? idea for a combined Swiss regulator came
A common theme in each of these areas together increasingly during a time when
is risk, as we will demonstrate in this article. financial markets were under severe strain
While by itself not a complete guidepost, following the collapse of the overleveraged
risk serves as a key driver in shaping our ‘new economy’in the 2001-2003 period and
approach, our priorities, and our expecta- that the resulting product (FINMA) came
tions of what the companies that we super- into existence in the middle of another
vise should be doing. financial crisis.3 Indeed, FINMA’s birth in
Given the importance of financial serv- January 20094 coincided with the intense
ices in the Swiss economy,1 the question of activity being pursued in many jurisdic-
how best to regulate and supervise the sec- tions, including Switzerland, to stabilise
tor has long been of central interest among financial markets following the failures at
systemically important
Volume I, Issue III,
financial institution
Autumn Winter 2009-2010
Subscribe
to the Foreign Corrupt
Legal &
Li
Practices Act?
Financial markets
remuneration reform: Tham Yuet-Ming
one step forward
Of ‘Black Swans’, Umesh Kumar
stress tests & optimised & Kevin Marr
to the
risk management
subject
Challenging the
value of enterprise David Samuels
actly is
risk management
Practice
for global accountanc Tim Pagett & Ranjit
Jaswal
y convergence
Corrupt
The Asian regulatory Dr Philip Goeth
Rubik’s Cube
Foreign Yuet-Ming
, DLA Alan Ewins and Angus
Ross
er, Tham mines the
In this pap consultant, exa Asia.
g Kong FCPA in
Piper Hon ious effects of the
pernic h
y of whic
anies – man legis-
reds of comp anies. The US
by hund comp even-
Practices were Fortune 500 these scandals by
Corrupt to
today
Foreign in the e responded FCPA in 1977.
The US nnings ial latur s to the
its begi enacting
the
provision
A), has rgate Spec the
Act (FCP n the Wate o- tually e are two main isions, and
era, whe ntary discl e Ther bribery prov SEC and the
Watergate called for volu mad the anti-
r had – Both the
Prosecuto companies that ard FCPA nting provisions. J) have juris-
to Rich Justice (DO
sures from contributions aign. accou
rtment of the SEC
ble US Depa . Generally, s and
questiona presidential camp the FCPA provision
Nixon’s
1972 diction over accounting against issuers
revealed cutes the s as s
these disclosures ents prose bribery provision ative proceeding
paym anti-
However, ble dom
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questiona had been channelle civil and companies
not just through prosecutes ry provisions
funds that n business. whereas the DOJ anti-bribe
but illicit nts to obtai ti- s for the edings.
n governme to subsequent inves individual proce
Risk mana
gement
to foreig Exchange through criminal
mation led rities and
The infor that
the US Secu h revealed
gatio ns by
) whic to ery prov ision makes it Of ‘Black
ion (SEC
Commiss issuers kept “slus
h funds”
cal The
anti-brib bribery provision ing Swans’, stre
and politi ’s anti- ey or anyth -
optimised ss tes
risk manag ts &
many US n officials The FCPA ide mon
s to foreig offer or prov als (“foreign”meanor
pay bribe illegal to n offici obtain
parties. up with
a volun tary
of value
to foreig
) with the
inten t to
business
to ement
later came h any cor- “non-US” directing Standard &
The SEC e under whic payments ing business, or for Poor’s
programm outlines the
disclosure eported
which self-r the SEC was
illicit
given
retain
n. can inclu
de sponsor- positive bene David Samuels
poration any perso of value of a holi- fits of bank
with likely ation, use
perated it would Anything ent, testing on stress
and co-o ance that The resul
t l and educ employm the bottom
mal assur nt action. for trave of future It is ea is no
an infor enforceme $300 ship home, promise s. Ther big challe line.
than USD s and meal a robust appro nge for banks to build
be safe from sure that more (a mas-
day
drink
disclo ents unts, of worst-case ach to managing the downturn
was the ble paym e disco capital adequ
questiona been mad 147 scena
stress risk uncov
million in in the 1970s) had by definition,
are triggered
rios that, almos er risk conce acy progra
ntrations and ms to
unt t encies,
sive amo unlikely or
unpreceden by apparently to and; applyi risk
ng these impro depend-
Nort h Asia ted drive
Risk events. busine vemen
lation & through perfor ss selection – for examp ts
of Regu However, solvin
Journal g the adjust mance analys le,
fying the risk problem of is and risk-
concentratio identi- into ed pricing that takes
Contact
cies that give ns and depen account. stress test results
rise to worst- den-
vital if the case outcom
industry is es is Top-le
vidual banks to thrive – vel oversight
are and if indi-
past two years to turn the lessons Buildin
to competitive of the proces g a more robust and
Banks that advantage. s for uncovering compr ehensive
tackle the issue threats to the
be lauded by
investors and head-on will prise is clearly, in part, enter-
coming years regulators ance challe a corporate
Christopher Rogers
nge.The board govern
most impor
of industry
recuperation
in the must
have the motiv and top execut -
tantly, will ives
tained profita be able to delive and, scrutinise and ation and
the clout to
bility gains. r sus- able call a halt to
that are well Meanwhile, activities if apparently
placed to take banks term these are not profit-
consolidatio advantage interests of in the longer
n process need of the the the enterprise -
can understand to be sure intended risk or do not fit
the risks embed they profile of the
portfolios of ded in the But contrary organisation
General Secretary
potential acquis ing to popular .
To improve itions. corporate govern opinio n, improv-
ance is not
and strengthen enterprise risk manag tion of puttin
g the ‘right’ just a ques-
investor confid ement
banks can take ence, we think board members in executives
and
the lead in appropriate place and
Better board three related incent giving them
and senior areas: ives.
sight and executive over- For the bank
contro to make the
agement; re-inv l of enterprise risk sions when
they are difficu right deci-
igorated stress man- busine
christopher.rogers@irrna.org
testing and ss growth lt, e.g. when
or when risk looks good
Journal of managemen in the upturn,
Regulation t looks expen
& Risk North sive
Asia
163
THE regulatory and supervisory struc- change regarding financial crisis resolution.
ture of Japan’s financial industry has The FSA, unlike the MoF until 1997, cannot
been a fairly simple one. Until the late make independent decisions on the use of
1990s, most regulatory and supervisory public money for resolving financial crises.
functions belonged to the Ministry of In order to fill the gap, a committee headed
Finance (MoF). Following widespread by the Prime Minister – the Financial Crisis
criticisms, fiscal policy and financial Management Council – now exists to make
administration was separated. decisions on the use of exceptional measures
involving fiscal resources during a financial
The Financial Supervisory Agency (FSA) crisis. I will return to this point later.
was established in June 1998 and since then
has been in charge of inspection and super- Broader interpretation
vision. Furthermore, drafting of laws and In addition to the FSA, the BoJ has carried
other rule-making functions concerning the out inspections (on-site examinations) of
financial system were moved from the MoF the financial institutions that have current
to the FSA in July 2000. Similarly, the plan- accounts with the BoJ. The BoJ law stipu-
ning and execution of measures directed at lates that the bank can enter into contracts
crisis prevention and containment went to with financial institutions to carry out on-site
the FSA after disbandment of the Financial examinations in order to fulfill its objective of
Reconstruction Committee. the maintenance of financial system stability.
One exception to this structure is that The BoJ seems to interpret the role of inspec-
the FSA delegates the surveillance of secu- tion more broadly. The BoJ (2004) states that:
rities and financial futures markets to “The Bank conducts on-site examinations
the Securities and Exchange Surveillance and off-site monitoring of financial institu-
Commission. The transfer of the finan- tions that hold current accounts with the
cial regulatory responsibility from the MoF Bank, so that it can assess their business
to the FSA has created one substantive operations and financial condition, and,
1.2
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19
Enhancing cross-border
regulation after the 2008 crash
New York State’s banking watchdog
Richard Neiman calls for closer worldwide
supervisory co-operation.
IN the wake of the financial crisis, an briefly discuss the dual banking system in
effective framework for cross-border the US and the scope of state supervision.
supervision of financial institutions The dual banking system that consists of
has become an even more compelling complementary state and federal oversight
imperative. Financial and technologi- is one of the unique aspects of the US frame-
cal innovation has rapidly facilitated work for financial services regulation; this
interconnected global markets, but our directly impacts cross-border issues. This
supervisory infrastructure has failed to dual supervisory system may seem like a
keep pace. very interesting approach, especially if you
are coming from a country with a more cen-
The idea of one supranational global tralised model. In the course of US history
regulator – whether a dream come true or a we have found a unique equilibrium in dual
nightmare – is still only imaginable. So how oversight that confers the benefits of both a
should we move forward as an international centralised and a decentralised structure.
community? What strategies will best pro-
mote financial stability through cross-border Institutional partnerships
supervision that is conducted primarily by Close interaction with local regulators at
national regulators? I believe the answer is state level provides benefits to financial
threefold: (1) Harmonisation of standards, institutions, especially those with unique
with appropriate flexibility to address local business models such as community banks,
situations; (2) Co-operation in examina- private/niche banks, or foreign banking
tion and enforcement activities, including organisations that in turn facilitate inter-
expanded use of supervisory colleges; and, (3) national trade. In New York, we charter just
Expansion of the resolution process, to pro- over 100 domestic banks and supervise
vide for the orderly unwinding of systemi- these institutions in partnership with either
cally significant non-bank financial firms. the Federal Deposit Insurance Corporation
Before elaborating on these points, I will (FDIC) or the Federal Reserve. Twenty of
The crisis of 2008 has forced economic inflation was stable, the output gap was
policymakers to react in ways not antici- likely to be small and stable and monetary
pated by the pre-crisis consensus on how policy did its job. We thought of fiscal policy
macroeconomic policy should be con- as playing a secondary role, with political
ducted. In this paper, the authors review constraints limiting its usefulness. And we
the main elements of the pre-crisis con- thought of financial regulation as mostly
sensus, identify those that were wrong, outside the macroeconomic policy frame-
and outline possible contours of a new work. Admittedly, these views were more
macroeconomic policy framework. closely held in academia; policymakers were
more pragmatic. Nevertheless, the prevailing
The Great Moderation (Gali and Gambetti consensus played an important role in shap-
2009) lulled macroeconomists and policy- ing policies and institutions.
makers alike in the belief that we knew how
to conduct macroeconomic policy. The cri- Central bank priorities
sis clearly forces us to question that assess- Stable and low inflation was presented as
ment. In a recent IMF Staff Position Note the primary, if not exclusive, mandate of
(Blanchard, Dell’Ariccia and Mauro 2010, central banks. This resulted from the repu-
which includes a bibliography), we review tational need of central bankers to focus on
the main elements of the pre-crisis con- inflation rather than activity and the intellec-
sensus; we seek to identify what elements tual support for inflation targeting provided
were wrong and what tenets of the pre-crisis by the New Keynesian model. In the bench-
framework still hold; and we take a tentative mark version of that model, constant infla-
first pass at the contours of a new macroeco- tion is indeed the optimal policy, delivering
nomic policy framework. a zero output gap, which turns out to be the
To caricature: we thought of monetary best possible outcome for activity given the
policy as having one target, inflation, and imperfections present in the economy. This
one instrument, the policy rate. So long as “divine coincidence” implied that, even if
Due to the recent global financial crisis, its practical applicability in the current global
risk management and compliance moni- economy.
toring has been the top priority of regu- In late 1977, after the Lockheed
latory enforcement officials. Trends have Corporation bribery and Watergate cor-
shown that punishing wrongdoers with ruption scandals, President Jimmy Carter
hefty penalties and re-aligning the FCPA signed the FCPA into law.1 As the first nation
regulation during crisis periods will to enact an anti-bribery statute, it was the
lead to a reputable American brand and intent of the US Congress to criminally
regain confidence in the global market. prosecute corporations and individuals that
bribe foreign officials when engaging in
In the ‘’business of bribery’’ it is not business dealings. In 1988, under the global
uncommon to influence human behaviour demands of the Organisation for Economic
for a favourable outcome by means of finan- Co-operation and Development (OECD)
cial incentives. In a global competitive capital Convention, President Ronald Reagan
market, multinational organisations have amended the FCPA to include foreign com-
used bribery as a means of promoting firms’ panies which, as“domestic concerns’’, com-
interests for centuries. On the other hand, mit an offence under US jurisdiction.
individuals have used bribery as a commer-
cial necessity to conduct day-to-day busi- Wider scope
ness across the globe. In 1998, President Clinton signed the
This article argues the effectiveness of the International Anti-Bribery and Fair
enforceable legal framework used by devel- Competition Act by further amending“FCPA
oped countries across the world to combat liability (criminal and civil) to include foreign
bribery as an illegal offence. In particular the nationals, foreign business and public inter-
Foreign Corrupt Practices Act (FCPA) in the national organisations (such as the United
United States has been used as a bench- Nations, the International Committee
mark to argue several points pertaining to of the Red Cross, various international
IN an article in the Financial Times on that future loan losses might well be higher.
December 15, 2009, Martin Taylor, former However, accounting standards are designed
Chief Executive of Barclays Bank, argued to reflect today’s already observable facts –
that the core cause of the financial crisis and to limit the role of judgment as to future
was that ‘the system was brought down possible events.
because bankers could not count’ and Whether that should be the case is now
‘because there was no measure of cash subject to intense debate, with two very dif-
flow to tell them that they were idiots’ in ferent points of view.
their assessments of income. Among bank prudential regulators and
central banks there is a belief that existing
The article was reported as an attack on bank accounting standards were among the
innumerate bankers; in fact it was an attack factors contributing to the crisis, inducing
on accounting standards and on the way in procyclicality in credit provision and pric-
which they are applied. Indeed, there have ing. In addition, there is a demand that bank
always been bankers concerned about exist- accounting standards must reflect the con-
ing accounting approaches. Ahead of the cerns of prudential regulators. This is accom-
crisis, there were both bankers and some panied by the belief that banks are different,
boards of banks worried about how low and therefore accounting standards need to
their commercial loan loss provisions had to recognise and accommodate this.
be to comply with accounting standards.
They were low because few commer- If truth be told . . .
cial customers were behind with payments, However, among many securities analysts
so that there were very few observable and investors and among some account-
facts to suggest potential loan impairment. ing standards setters, the belief remains that
Following the most recent boom period, accounts exist for investors and not for regu-
with warning signs beginning to flash across lators, that they must tell the‘truth’as it exists
the world economy, judgment suggested at one particular point in time, and that any
The timing of the subprime crisis that thus date the beginning of the crisis in the
became the global crisis is well known. foreign exchange market as August 2007.
Its impact on the foreign exchange mar- An efficient way to visualise the various
kets has been much less discussed. This stages of the crisis in the currency market
column fills that void. Its findings sug- is provided by the returns to the so-called
gest that foreign exchange portfolio man- “carry trade,” a popular foreign exchange
agers could have protected their portfolio investment strategy of taking long positions
by an appropriate risk control strategy in high-interest rate currencies financed by
using market stress indicators. short positions in low-interest rate curren-
cies. Figure 1 (overleaf) displays a standard
The crisis in the foreign exchange (FX) mar- carry trade index over the crisis period.
ket came relatively late. In the early summer
of 2007, it was apparent that fixed income Flight to quality
markets were under considerable stress. Beginning in August 2007, the first wave of
Then, in July 2007 the dominoes began to fall the subprime crisis hit the foreign exchange
as supposedly market-neutral equity port- market as losses in equity and fixed income
folios suffered huge losses and it was com- portfolios spilled over as portfolio managers
mon to hear talk of a five (or larger) standard deleveraged and liquidated winning posi-
deviation event, reflecting the failure of tions, including their currency positions.
traditional financial risk analysis to capture November 2007 saw credit problems
systemic effects. increase as firms found it increasingly dif-
Foreign exchange market participants ficult to issue commercial paper, and there
watched these other markets with grow- was a flight to quality in which yields on US
ing trepidation. Their fears were realised on Treasury securities fell substantially. Investors
16 August 2007 when a major unwind of shed risk from their portfolios, including for-
the carry trade occurred and many currency eign exchange investments.
market investors suffered huge losses. We Risk appetite fell again in March 2008 as
rumours of Bear Stearns’ imminent demise exposures more carefully than ever and some
began to circulate. The orderly rescue and institutions, considered more at risk than
sale of Bear Stearns to JP Morgan Chase others, found their client base shrinking.
restored some stability to the market. The
market came to believe that there is a “too Risk, volatility and transaction costs
big to fail” doctrine, so that counterparty The failure of Lehman added a new dimen-
risks were perceived as manageable going sion to perceptions of risk. Post-Lehman
forward. Then, in September 2008, this exchange rates experienced unprecedented
confidence-building exercise was undone as levels of volatility and FX transaction costs
Lehman Brothers was allowed to fail, as pol- rose dramatically.
icymakers began to worry about the moral When market makers provide liquidity
hazard implications of bank rescues. to the market, they assume inventory posi-
Lehman Brothers’ failure imposed huge tions in currencies as a result of their trades.
losses on many of their counterparties who The greater volatility, the greater risk they
were unable to collect on obligations owed face from holding positions. As a result, the
them. Post-Lehman, there was a dramatic bid-ask spread rises to compensate them for
fear across the market as to where losses this risk.
hid and who might be next to go under. In the fall of 2008, FX spreads wid-
Institutions were monitoring counterparty ened dramatically (Table 1, below). In the
EUR-USD 1 0.2 5 10
GBP-USD 3 0.3 12 12
USD-JPY 3 0.2 12 10
USD-CHF 4 0.4 16 15
AUD-USD 4 0.4 20 20
USD-CAD 4 0.3 20 30
NZD-USD 8 0.5 40 10
collapse of Bear Stearns). With the single In this regard, we see that the financial
exception of a brief lull in May 2008, when stress index and similar market stress indica-
index falls to about 0.7 standard deviations tors may have practical potential to add value
above the mean, it remains more than one to foreign exchange investments.2 •
standard deviation above the mean for the
rest of the sample, spiking up in October to Footnotes
more than four standard deviations from 1 We look at the same group of 17 developed countries
the mean following the Lehman ebacle in as in the IMF study but, in contrast to the IMF analy-
September. sis, we built a ‘global’ financial stress index based on an
We simulated the returns an investor average of the individual country indices. See Melvin &
could have earned from investing naively in Taylor (2009);
the Deutsche Bank Carry Return Index and 2 This is likely to be true even after allowing for transac-
the returns from investing in the index in tion costs and implementation lags – see M&T (2009).
normal periods and closing out the position
in stressful periods when the FSI exceeds a References
value of 1. Over the entire 2000-2008 period IMF (2008), “Financial Stress and Economic Downturns,”
studied, the naïve carry strategy yields an World Economic Outlook: Chapter 4, 129-158.
information ratio of -0.3 (the annualised Melvin, Michael and Mark P.Taylor (2009),“The Crisis in the
return divided by the annualised standard Foreign Exchange Market,” CEPR Discussion Paper 7472,
deviation of returns) while the risk-control- September (forthcoming in the Journal of International
led carry strategy yields a ratio of 0.69. Over Money and Finance special issue on the Global Financial
the more recent 2005-2008 period, the naïve Crisis, December 2009).
information ratio is -0.66 while the risk- New York Fed (2009).”Timelines of Policy Responses to
controlled information ratio is 0.31. the Global Financial Crisis.”
Can the drying up of trade finance help standard gravity and macro models of trade
explain the recent collapse in exports would have predicted given the changes
relative to output? Using firm-level in supply, demand, and relative prices (see
data, this article examines the effect that Chinn 2009, Campbell et al 2009, Levchenko,
trade finance had on exports during the Lewis, and Tesar 2009a, OECD 2009).
Japanese financial crisis of the 1990s. It
suggests that the direct effect of declining Why the collapse in trade?
bank health on exports caused at least a Several authors have argued that trade
third of the decline in Japan’s exports at finance may have been partially responsible
the time. for the remarkable fall in trade (Auboin 2009
and OECD 2009). However, most empirical
One of the most striking features of the most work relating to trade finance has been ham-
recent global financial crisis is the collapse pered by the lack of information regarding the
in international trade – a fact highlighted by institutions providing the finance and what
Richard Baldwin in a recent Vox ebook, The was happening to domestic sales at the same
Great Trade Collapse. time [e.g. Bricogne et al (2009), Levchenko,
Figure 1 (overleaf) plots the ratio of real Lewis, and Tesar 2009b, Mora and Powers
world exports to real gross domestic prod- 2009 and Chor and Manova 2009].
uct (GDP) for a sample of the world’s largest Hence, the mixed findings of these stud-
economies.This illustration shows the decline ies which are in addition, hard to interpret
in world exports was much greater than because a clear link cannot be identified
the decline in world GDP. Between the first between changes in financial conditions
quarter of 2008 and the first quarter of 2009, and changes in exports and the inability to
the real value of GDP fell 4.6 per cent while address the question of whether financial
exports plunged 17 per cent – a decline of shocks affect exports more than domestic
US$761 billion in nominal terms. Moreover, sales as is suggested in Figure 1 above. The
this decline in exports was much larger than role that trade finance played has come as
Source: This figure was constructed using national sources: Australia, Australian Bureau of Statistics; Belgium, the
Banque Nationale de Belgique; Canada, Statistics Canada; France, National Institute of Statistics and Economic
Studies; Germany, Deutsche Bundesbank; Hong Kong, Hong Kong Census and Statistics Department; Italy,
Istituto Nazionale di Statistica; Japan,Cabinet Office; Netherlands, Centraal Bureau voor de Statistiek; Norway,
Statistik Sentralbyra;South Korea, Bank of Korea; Spain, Instituto Nacional de Estadistica; Sweden, Statistiska
Centralbyran; Switzerland, State Secretariat for Economic Affairs; Taiwan, Directorate General of Budget,
Accounting and Statistics; United Kingdom, Office of National Statistics; and United States, Bureau of Economic
Analysis. The set of countries accounted for 66% of world GDP and 68% of world exports in 2008.
a surprise to most academic economists, as have failed to predict the dramatic collapse
trade finance is almost completely ignored in world exports is due to their simplistic
by the academic literature. Most interna- modelling of the role of the financial sector
tional models assume international payment in international trade. It is suggested that in
settlement markets function perfectly. order to understand how trade responds to
In a new paper (Amiti and Weinstein financial crises, it is necessary incorporate
2009) we argue that a potentially important ‘financial accelerators’ as used by Bernanke,
reason why most macro and trade models Gertler, and Gilchrist (1999) that specify
Resecuritisation
systemically important
in banking: major
Volume I, Issue III,
financial institution
s
Autumn Winter 2009-2010
Dr Eric S. Rosengren
Global
funding liquidity Dr Fang Du
in times of financial
comp Housing, monetary crisis
and fiscal policies: Dr Ulrich Bindseil
nt – from bad to worst
manageme ent
Derivatives: from
disaster to re-regulati Stephan Schoess,
products pot on
head of details a
Black swans, market Professor Lynn A. Stout
EastNet’s David Dekker,
crises and risk: the
rkets. human perspectiv
ncial ma Measuring & managing e
nce,
complia al reaction in fina
risk for innovative Joseph Rizzi
financial instrumen
Red star spangled ts
che mic banner: root causes
of the financial crisis
Dr Stuart M. Turnbull
and in
the
the finan ge that is tored their current and we have mov
ed markets remuneration
reform: one step
Tham Yuet-Ming , non-regul
has trans
formed
. the chan than cove
rs ly
how rapid n on the Ofbank
s
‘Black Swans’, stress tests
forward
Umesh Kumar & Kevin
and ‘desup ation
osive pace in scope Look at actio ation) to
& optimised risk Marr
an expl
is much
broader
occurring expected. bank
s that
were
from phys
ical inter
and hour
s of oper Challengin
banking.
g the value of enterprise
management
David Samuels ervisio n’
fail or fall s (location Internet Rockybut
risk management
Professor
causes of the William Black exam
nally to term then
origi too big by ents e, road ahead for global Tim Pagett & Ranjit Jaswal
d to be taken over ronic paym still in charg to a accountancy convergenc
considere
failing or being more finan- elect n the banks were igm is shifti ThengAsian regulatory
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Alan Ewins and Angus
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in ) pay technologi r of this
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ns Savings & of private marke and a wholesale
the abilit ng the ork Loans debac g heroes of the and t discipline
trust and determini risk Netw future the bank and othe
r pay- Professor
Black nowa le of the 1980s, Crime
other forms of fraud
mer and ongoing the NACHA
of credit risk.
ing a custo be part of the as In SWIFT, providers of his time days spend s Enforcemen The Financial
ld n, as well such as network researching s much t Network
of it, shou of the organisatio become A to B markets have why financ released a (FinCE
ent ng and new ment networks send money from traf- a tendency ial Activi study this
week on Suspic N)
managem ess of existi ng to ork functional. to become ty Reports
g the riskin using/buyi allow you you for the netw Reno dys- lated (SARs ious
ges that s similari- ‘control fraud wned for his theory financial institu ) that federally regu-
Contact
monitorin customers e
ucts and the are more chan and will charg rate. This bring y University
’, Prof. Black on with tions (some
prod there are energ lectures at the Federa times) file
ucts. But world that you gene as telecom, of Missouri the (FBI) l Bureau of
these prod s in the banking fic that stries such financial He is the autho and Kansa when they Investigation
enge known it. with indu anies. The r of ‘The Best Way s City. fraud. find eviden
and chall as we have not be the ties cable comp g an important a Bank is ce of mortg
g banking e, liers and rgoin to Own One: to Rob age
threatenin s will, in the futur our funds, supp is clearly unde Executives
and Politi
How Corpo
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e world
The bank by which to mov ; they 135 S&L Indus cians Loote mic warni
les portfolios try.’ A prom d the The ng
default vehic balances and tor on the inent comm FBI began
Christopher Rogers
our causes of enta- mortg warning of
maintain crisis, Prof. the curren age fraud in an “epidemic”
h Asia Black is a t financial their congre of
Risk Nort way the US vocal critic mony ssional testi-
lation & governmen of the ago. in September 2004 –
of Regu banking crisis t has handl It also warne over five years
Journal and rewar ed the not d that if the
that have ded institu dealt with epidemic were
clearl tions sis. it would cause
duties to inves y failed in their fiduci Nothi a financial
tors. ary respon ng remotely adequate cri-
d to the epidem was done to
General Secretary
enforcemen ic by regula
The following t, or private tors, law
commentary sector
essarily repres
ent the view does not nec- cipline.” Instead, the epidem “market dis-
Regulation of the Journa hyper-inflate ic produced
and Risk – l of that d a bubble and
North Asia. produced a in US housin
“The new crisis so severe g prices
numbers on
rals for mortg criminal refer- caused the collapse that it
age fraud in
the US are system of the global nearly
just in many and led to unpreceden financial
christopher.rogers@irrna.org
Journal of of the world ted bailouts
Regulation ’s largest banks of
& Risk North .
Asia
33
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