Supervising bank safety and soundness: some open issues

Banks and banking ; Bank supervision

Method and apparatus for controllably heating fluid Patent

Using heat control unit to preheat circulating flui

Market discipline in the governance of U.S. Bank Holding Companies: monitoring vs. influencing

Market discipline is an article of faith among financial economists, and the use of market discipline as a regulatory tool is gaining credibility. Effective market discipline involves two distinct components: security holders' ability to accurately assess the condition of a firm ("monitoring") and their ability to cause subsequent managerial actions to reflect those assessments ("influence"). Substantial evidence supports the existence of market monitoring. However, little evidence exists on market influence, and then only for stockholders and for rare events such as management turnover. This paper seeks evidence that U.S. bank holding companies' security price reliably influence subsequent managerial actions. Although we identify some patterns consistent with beneficial market influences, we have not found strong evidence that stock or (especially) bond investors regularly influence managerial actions. Market influence remains, for the moment, more a matter of faith than of empirical evidence.Bank holding companies ; Bank supervision ; Bonds ; Stocks

The Federal Home Loan Bank system : the "other" housing GSE.

Founded in 1932, the twelve Federal Home Loan Banks (FHLBs) have historically provided long-term funding to specialized mortgage lenders. But legislative changes in the wake of the 1980s’ thrift crises spurred the FHLBs to expand in both size and scope. For example, FHLB balance sheets now also include a substantial investment in mortgages and mortgage-backed securities, and the attendant interest rate risk has created financial and accounting difficulties at some of the FHLBs. ; Like Fannie Mae and Freddie Mac, the FHLB System is a government-sponsored enterprise that funds itself largely with federal agency debt obligations that investors perceive to be implicitly guaranteed by the U.S. government. This article identifies some differences in risk-taking incentives between the cooperatively owned FHLB System and investor-owned Fannie Mae and Freddie Mac. ; Cooperative ownership itself does not reduce FHLB risk-taking incentives because, unlike many mutuals, the FHLB System does not bundle its equity and debt claims. Also, the joint-and-several liability provision in the FHLBs’ consolidated debt obligations and a lack of equity market discipline may heighten FHLB risk-taking incentives. However, the FHLBs cannot avail themselves of equity-based managerial compensation, which create high-powered risk-taking incentives in investor-owned firms. Thus, it is unclear whether the FHLBs’ risk-taking incentives are necessarily weaker than Fannie Mae’s and Freddie Mac’s.Federal home loan banks

Feasibility test for a V-slit star mapper for pioneer spacecraft terminal navigation

A laboratory demonstration of the feasibility of using a V-slit star mapper to meet the sensitivity and accuracy of on-board navigational requirements for future Pioneer Missions to the outer planets was conducted by the Control and Sensors Laboratory of TRW. The breadboard was extremely simple in configuration, consisting of an end-on photomultiplier tube and a V-slit reticle located at the focal plane of the objective lens. In addition, a plano-convex lens was used between the reticle and the PMT in a Fabry-Perot configuration. The analytical effort indicated that the sensor should easily meet the requirements. The Pioneer SRA test set was examined to determine its basic accuracy and modify it where necessary to bring its accuracy into the 1-3 arc second range. The test results show that it is feasible to use this type of star mapper in the 10 arc second accuracy range. The test equipment accuracy (approximately 5 arc Sec) was sufficient to bound the sensor errors at less than 10 arc seconds

The 2007-09 financial crisis and bank opaqueness

Doubts about the accuracy with which outside investors can assess a banking firm’s value motivate many government interventions in the banking market. The recent financial crisis has reinforced concerns about the possibility that banks are unusually opaque. Yet the empirical evidence, thus far, is mixed. This paper examines the trading characteristics of bank shares over the period from January 1990 through September 2009. We find that bank share trading exhibits sharply different features before vs. during the crisis. Until mid-2007, large (NYSE-traded) banking firms appear to be no more opaque than a set of control firms, and smaller (NASD-traded) banks are, at most, slightly more opaque. During the crisis, however, both large and small banking firms exhibit a sharp increase in opacity, consistent with the policy interventions implemented at the time. Although portfolio composition is significantly related to market microstructure variables, no specific asset category(s) stand out as particularly important in determining bank opacity.Banks and banking ; Stock market ; Financial crises

Market evidence on the opaqueness of banking firms' assets.

We assess the market microstructure properties of U.S. banking firms' equity, to determine whether they exhibit more or less evidence of asset opaqueness than similar-sized nonbanking firms. The evidence strongly indicates that large banks (traded on NASDAQ) trade much less frequently despite microstructure characteristics. Problem (noncurrent) loans tend to raise the frequency with which the bank's equity trades, as well as the equity's return volatility. The implications for regulatory policy and future market microstructure research are discussed.Bank stocks ; Bank assets