Executive compensation at Fannie Mae and Freddie Mac

Corporate governance-and executive-compensation arrangements in particular-should be an important component of the agenda to reform the housing GSEs. The GSEs' safety-and-soundness regulator-who is essentially the debtholders' and taxpayers' representative-must be admitted to the GSEs' boardroom in a way that is atypical of an ordinary publicly held company. This intrusion into the board's oversight of executive-compensation plans is justified given the GSEs' public purposes and their large potential cost to taxpayers. Prudent public policy requires greater supervisory control over executive compensation at the GSEs, which would follow a precedent set in banking.Government-sponsored enterprises ; Executives - Salaries

What does the Federal Reserve's economic value model tell us about interest rate risk at U.S. community banks?

The savings and loan crisis of the 1980s revealed the vulnerability of some depository institutions to changes in interest rates. Since that episode, U.S. bank supervisors have placed more emphasis on monitoring the interest rate risk of commercial banks. Economists at the Board of Governors of the Federal Reserve System developed a duration-based economic value model (EVM) designed to estimate the interest rate sensitivity of banks. The authors test whether measures derived from the Fed’s EVM are correlated with the interest rate sensitivity of U.S. community banks. The answer to this question is important because bank supervisors rely on EVM measures for monitoring and risk-scoping bank-level interest rate sensitivity. The authors find that the Federal Reserve’s EVM is indeed correlated with banks’ interest rate sensitivity and conclude that supervisors can rely on this tool to help assess a bank’s interest rate risk. These results are consistent with prior research that finds the average interest rate risk at banks to be modest, though the potential interaction between interest rate risk and other risk factors is not considered here.Risk management ; Interest rates ; Banks and banking

Relationship loans and regulatory capital: why fair-value accounting is inappropriate for bank loans

Banks have been required to report many securities and all derivatives at fair values under U.S. GAAP rules for many years. Soon, International Accounting Standards will provide some banks with a “fair-value option” for loans, also. A similar movement toward applying fair values to loans may occur in the U.S. in the near future, too. ; This paper argues that fair-value accounting is inappropriate for banks’ relationship loans from the standpoint of safety-and-soundness supervision—that is, for the purposes of calculating a bank’s regulatory capital. The argument is straightforward, although perhaps not obvious.Bank loans ; Bank capital ; Bank supervision

Financial condition of community banks

This article examines the condition of the banking industry in the United States, with an emphasis on community banks. In spite of the recent recession, the condition of the banking industry is substantially better than during the recession of 1990-91. There has been an increase in problem loans at both large and small banks during recent quarters, and nonperforming loans have risen relative to the allowance for loan and lease losses. Among the banks in each of the size groups in this article, however, ratios of equity to total assets in recent quarters are at about their highest levels since the early 1990s. Output of an early warning model of bank distress, which converts individual measures of bank condition into an index number, indicates a substantial improvement in the condition of community banks and larger banks after the early 1990s. While the median probability of failure has been higher for community banks than for larger banks during recent quarters, the difference is very small. Trends in the ratings that supervisors have assigned to the banks examined during recent quarters are not consistent with the view that examiners have been detecting a systematic deterioration in the condition of community banks.Community banks ; Bank supervision

What does the Federal Reserve’s economic value model tell us about interest rate risk at U.S. community banks?

The savings and loan crisis of the 1980s revealed the vulnerability of some depository institutions to changes in interest rates. Since that episode, U.S. bank supervisors have placed more emphasis on monitoring the interest rate risk of commercial banks. One outcome developed by economists at the Federal Reserve Board of Governors was a duration-based Economic Value Model (EVM) designed to estimate the interest rate sensitivity of banks. ; We test whether measures derived from the Fed’s EVM are correlated with the interest rate sensitivity of U.S. community banks. The answer to this question is important because bank supervisors rely on EVM measures for monitoring and scoping bank-level interest rate sensitivity. ; We find that the Federal Reserve’s EVM is indeed correlated with banks’ interest rate sensitivity and conclude that supervisors can rely on this tool to help assess a bank’s interest rate risk. Our results are consistent with prior research that finds the average interest rate risk at banks to be modest, though we do not consider the potential interaction between interest rate risk and other risk factors.Community banks ; Risk management ; Interest rates

The financial condition of U.S. banks: how different are community banks?

This article examines the condition of the banking industry in the United States, with an emphasis on community banks. In spite of the recent recession, the condition of the banking industry is substantially better than during the recession of 1990-91. There has been an increase in problem loans at both large and small banks during recent quarters, and nonperforming loans have risen relative to the allowance for loan and lease losses. Among the banks in each of the size groups in this article, however, ratios of equity to total assets in recent quarters are at about their highest levels since the early 1990s. Output of an early warning model of bank distress, which converts individual measures of bank condition into an index number, indicates a substantial improvement in the condition of community banks and larger banks after the early 1990s. While the median probability of failure has been higher for community banks than for larger banks during recent quarters, the difference is very small. Trends in the ratings that supervisors have assigned to the banks examined during recent quarters are not consistent with the view that examiners have been detecting a systematic deterioration in the condition of community banks.Banks and banking

A unified analysis of executive pay: the case of the banking industry

This study examines executive compensation determinants in the U.S. banking industry. Multiple theories of executive pay are discussed and tested using a relatively homogenous sample. We perform an in-depth look at the corporate governance and ownership structure of the companies selected. We explore the simultaneous relationship between compensation, firm performance, and board strength, exploiting variables unique to the banking industry. Our primary finding is that after controlling for both regulatory oversight and external market discipline, a strong board is associated with higher firm performance and lower levels of executive pay, consistent with such a board of directors providing a strong monitoring function.Executives - Salaries

RUNX3 Regulates Intercellular Adhesion Molecule 3 (ICAM-3) Expression during Macrophage Differentiation and Monocyte Extravasation

The adhesion molecule ICAM-3 belongs to the immunoglobulin gene superfamily and functions as a ligand for the β2 integrins LFA-1, Mac-1 and αdβ2. The expression of ICAM-3 is restricted to cells of the hematopoietic lineage. We present evidences that the ICAM-3 gene promoter exhibits a leukocyte-specific activity, as its activity is significantly higher in ICAM-3+ hematopoietic cell lines. The activity of the ICAM-3 gene promoter is dependent on the occupancy of RUNX cognate sequences both in vitro and in vivo, and whose integrity is required for RUNX responsiveness and for the cooperative actions of RUNX with transcription factors of the Ets and C/EBP families. Protein analysis revealed that ICAM-3 levels diminish upon monocyte-derived macrophage differentiation, monocyte transendothelial migration and dendritic cell maturation, changes that correlate with an increase in RUNX3. Importantly, disruption of RUNX-binding sites led to enhanced promoter activity, and small interfering RNA-mediated reduction of RUNX3 expression resulted in increased ICAM-3 mRNA levels. Altogether these results indicate that the ICAM-3 gene promoter is negatively regulated by RUNX transcription factors, which contribute to the leukocyte-restricted and the regulated expression of ICAM-3 during monocyte-to-macrophage differentiation and monocyte extravasation

Multiple Wnt/ß-Catenin Responsive Enhancers Align with the MYC Promoter through Long-Range Chromatin Loops

Inappropriate activation of c-Myc (MYC) gene expression by the Wnt/ß-catenin signaling pathway is required for colorectal carcinogenesis. The elevated MYC levels in colon cancer cells are attributed in part to ß-catenin/TCF4 transcription complexes that are assembled at proximal Wnt/ß-catenin responsive enhancers (WREs). Recent studies suggest that additional WREs that control MYC expression reside far upstream of the MYC transcription start site. Here, I report the characterization of five novel WREs that localize to a region over 400 kb upstream from MYC. These WREs harbor nucleosomes with post-translational histone modifications that demarcate enhancer and gene promoter regions. Using quantitative chromatin conformation capture, I show that the distal WREs are aligned with the MYC promoter through large chromatin loops. The chromatin loops are not restricted to colon cancer cells, but are also found in kidney epithelial and lung fibroblast cell lines that lack de-regulated Wnt signaling and nuclear ß-catenin/TCF4 complexes. While each chromatin loop is detected in quiescent cells, the positioning of three of the five distal enhancers with the MYC promoter is induced by serum mitogens. These findings suggest that the architecture of the MYC promoter is comprised of distal elements that are juxtaposed through large chromatin loops and that ß-catenin/TCF4 complexes utilize this conformation to activate MYC expression in colon cancer cells

The DESI Bright Galaxy Survey: Final Target Selection, Design, and Validation

Over the next 5 yr, the Dark Energy Spectroscopic Instrument (DESI) will use 10 spectrographs with 5000 fibers on the 4 m Mayall Telescope at Kitt Peak National Observatory to conduct the first Stage IV dark energy galaxy survey. At z 10 million galaxies spanning 14,000 deg2 . In this work, we present and validate the final BGS target selection and survey design. From the Legacy Surveys, BGS will target an r 80% fiber assignment efficiency. Finally, BGS Bright and BGS Faint will achieve >95% redshift success over any observing condition. BGS meets the requirements for an extensive range of scientific applications. BGS will yield the most precise baryon acoustic oscillation and redshift-space distortion measurements at z < 0.4. It presents opportunities for new methods that require highly complete and dense samples (e.g., N-point statistics, multitracers). BGS further provides a powerful tool to study galaxy populations and the relations between galaxies and dark matter