The Decline of Traditional Banking: Implications for Financial Stabilityand Regulatory Policy

This paper outlines the fundamental economic forces that have led to the decline in traditional banking, that is the process of making loans and funding them by issuing short-dated deposits. The declining competitiveness of traditional banking may threaten financial stability by increasing bank failures and by increasing the incentives for banks to take on more risk, either by making more risky loans or by engaging in 'nontraditional' financial activities that promise higher returns but greater risk. This paper argues that most nontraditional activities, such as banks acting as derivatives dealers, expose banks to risks and moral hazard problems that are similar to those associated with banks' traditional activities, and that these activities can be regulated as effectively as can traditional activities. One regulatory approach to maintain financial stability and strengthen the banking system is to adopt a system of structured bank capital requirements with early corrective action by regulators. An important element in this approach is that market- value accounting principles would be applied to banks and there would be increased public disclosure by banks of the risks associated with their trading activities. With this regulatory structure in place, banks could be permitted greater freedom to expand into nontraditional activities.

The decline of traditional banking: implications for financial stability and regulatory policy

In recent years, the traditional business of banks--making long-term loans and funding them by issuing short--dated deposits-has declined. This development has raised concerns that more banks will fail or be forced to assume greater risk to remain profitable. This article first examines the economic forces responsible for banks' reduced role in financial intermediation. The authors then consider whether banks may be jeopardizing the stability of the financial system by extending riskier loans or engaging in derivatives dealing and other "nontraditional" financial activities that bring higher returns but could carry greater risk. The authors conclude that because most nontraditional activities expose banks to risks and moral hazard problems similar to those associated with banks' traditional activities, the new activities can be regulated as effectively as the old.Banks and banking ; Financial services industry ; Bank supervision

Anatomical pathways for auditory memory II: information from rostral superior temporal gyrus to dorsolateral temporal pole and medial temporal cortex

Auditory recognition memory in non-human primates differs from recognition memory in other sensory systems. Monkeys learn the rule for visual and tactile delayed matching-to-sample within a few sessions, and then show one-trial recognition memory lasting 10–20 min. In contrast, monkeys require hundreds of sessions to master the rule for auditory recognition, and then show retention lasting no longer than 30–40 s. Moreover, unlike the severe effects of rhinal lesions on visual memory, such lesions have no effect on the monkeys' auditory memory performance. The anatomical pathways for auditory memory may differ from those in vision. Long-term visual recognition memory requires anatomical connections from the visual association area TE with areas 35 and 36 of the perirhinal cortex (PRC). We examined whether there is a similar anatomical route for auditory processing, or that poor auditory recognition memory may reflect the lack of such a pathway. Our hypothesis is that an auditory pathway for recognition memory originates in the higher order processing areas of the rostral superior temporal gyrus (rSTG), and then connects via the dorsolateral temporal pole to access the rhinal cortex of the medial temporal lobe. To test this, we placed retrograde (3% FB and 2% DY) and anterograde (10% BDA 10,000 mW) tracer injections in rSTG and the dorsolateral area 38DL of the temporal pole. Results showed that area 38DL receives dense projections from auditory association areas Ts1, TAa, TPO of the rSTG, from the rostral parabelt and, to a lesser extent, from areas Ts2-3 and PGa. In turn, area 38DL projects densely to area 35 of PRC, entorhinal cortex (EC), and to areas TH/TF of the posterior parahippocampal cortex. Significantly, this projection avoids most of area 36r/c of PRC. This anatomical arrangement may contribute to our understanding of the poor auditory memory of rhesus monkeys

New proposals to regulate hedge funds: SEC Rule 203(b)(3)-2

On September 29, 2003, the Securities and Exchange Commission (SEC) issued a report on the “Implications of the Growth of Hedge Funds” (the “Report”). The Report raised several issues related to hedge funds and proposed a number of regulatory initiatives that the SEC might take. Its principal recommendation was that the SEC should require most hedge managers to register as investment advisers under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). On July 14, 2004, after a lengthy period of public comment on the Report, the SEC (“Commission”) adopted (by a split vote) Rule 203(b)(3)-2, which implements this registration recommendation, and set a two-month period for public comment before formally adopting the Rule on December 2, 2004

The representation of abstract task rules in the human prefrontal cortex

We have previously reported sustained activation in the ventral prefrontal cortex while participants prepared to perform 1 of 2 tasks as instructed. But there are studies that have reported activation reflecting task rules elsewhere in prefrontal cortex, and this is true in particular when it was left to the participants to decide which rule to obey. The aim of the present experiment was to use functional magnetic resonance imaging (fMRI) to find whether there was activation in common, irrespective of the way that the task rules were established. On each trial, we presented a word after a variable delay, and participants had to decide either whether the word was abstract or concrete or whether it had 2 syllables. The participants either decided before the delay which task they would perform or were instructed by written cues. Comparing the self-generated with the instructed trials, there was early task set activation during the delay in the middle frontal gyrus. On the other hand, a conjunction analysis revealed sustained activation in the ventral prefrontal and polar cortex for both conditions. We argue that the ventral prefrontal cortex is specialized for handling conditional rules regardless of how the task rules were established

Hippocampal and diencephalic pathology in developmental amnesia.

Developmental amnesia (DA) is a selective episodic memory disorder associated with hypoxia-induced bilateral hippocampal atrophy of early onset. Despite the systemic impact of hypoxia-ischaemia, the resulting brain damage was previously reported to be largely limited to the hippocampus. However, the thalamus and the mammillary bodies are parts of the hippocampal-diencephalic network and are therefore also at risk of injury following hypoxic-ischaemic events. Here, we report a neuroimaging investigation of diencephalic damage in a group of 18 patients with DA (age range 11-35 years), and an equal number of controls. Importantly, we uncovered a marked degree of atrophy in the mammillary bodies in two thirds of our patients. In addition, as a group, patients had mildly reduced thalamic volumes. The size of the anterior-mid thalamic (AMT) segment was correlated with patients' visual memory performance. Thus, in addition to the hippocampus, the diencephalic structures also appear to play a role in the patients' memory deficit

Associative3D: Volumetric Reconstruction from Sparse Views

This paper studies the problem of 3D volumetric reconstruction from two views of a scene with an unknown camera. While seemingly easy for humans, this problem poses many challenges for computers since it requires simultaneously reconstructing objects in the two views while also figuring out their relationship. We propose a new approach that estimates reconstructions, distributions over the camera/object and camera/camera transformations, as well as an inter-view object affinity matrix. This information is then jointly reasoned over to produce the most likely explanation of the scene. We train and test our approach on a dataset of indoor scenes, and rigorously evaluate the merits of our joint reasoning approach. Our experiments show that it is able to recover reasonable scenes from sparse views, while the problem is still challenging. Project site: https://jasonqsy.github.io/Associative3DComment: ECCV 202

Predicting Visual Overlap of Images Through Interpretable Non-Metric Box Embeddings

To what extent are two images picturing the same 3D surfaces? Even when this is a known scene, the answer typically requires an expensive search across scale space, with matching and geometric verification of large sets of local features. This expense is further multiplied when a query image is evaluated against a gallery, e.g. in visual relocalization. While we don't obviate the need for geometric verification, we propose an interpretable image-embedding that cuts the search in scale space to essentially a lookup. Our approach measures the asymmetric relation between two images. The model then learns a scene-specific measure of similarity, from training examples with known 3D visible-surface overlaps. The result is that we can quickly identify, for example, which test image is a close-up version of another, and by what scale factor. Subsequently, local features need only be detected at that scale. We validate our scene-specific model by showing how this embedding yields competitive image-matching results, while being simpler, faster, and also interpretable by humans.Comment: ECCV 202