Title: ACA Summit Salzburg Global Seminar
1ACA Summit Salzburg Global SeminarNew Rules
for Global Finance
- Nicholas W. Conger (WVWC) Nora Myers (UCWV)
- October 15, 2011
- Ashville, North Carolina
2 ACA Member Institutions
3Salzburg Global Seminar
- Appalachian College Association (ACA)
- Mellon Foundation Fellowship
-
4Austria
5Austria
6Austrian Alps The Sound of Music
7Grand Tetons National ParkWyoming
8Salzburg Global Seminar
9Schloss Library
10Schloss Dining Room
11Weiner Schnitzel
12Apple Strudelbut
13Salzburg Global Seminar
- Vienna, Austria
- -
- 1st Time in Vienna
14Belvedere Palace Prince Eugene
15City Hall
16Schonbrunn Palace - Hapsburg
17St. Stephens Cathedral
18Vienna Opera House
19Vienna Opera House
20University of Vienna Universität Wien
21Vienna National Library
22Bratwurst Sauer Kraut
23Café Sacher Sacher Tort
24Viennese Coffee
25Hotel Tram to VNB
26Austrian National Bank Oestereichische National
Bank (ONB)
27Federal Reserve Board (FED)
28Government Sponsored Enterprises (GSEs)
29Salzburg Global Seminar
30Conservatorship of GSEs - September 7, 2008
31- 2008 Global Financial Crisis
- Review of the Carnage
322008 Global Financial Crisis
- http//www.cfr.org/world/crisis-guide-global-econo
my/p19710
33New Rules for Global Finance
- 2008 Global Financial Crisis
- The Worst Crisis Since 1929
- Commercial Bank Failures in Ireland, UK, Iceland
- Hedge Fund Failures
- Investment Bank Failures or Near Failure
- Two GSEs placed into Conservatorship
- Global Insurance Company CDS
- Massive U.S. Central Bank U.S. Treasury
Infusion of Capital
34New Rules for Global Finance
- Architect's of the Multi-Trillion Fiscal
Bailout - Hank Paulson U.S. Treasury Sec
- Tim Geitner NY Fed President
- Ben Bernanke FED Chairman
- White House Presidents Bush Obama
- Congress Chris Dodd-Barney Frank
35Troubled Global Financial Institutions
- Northern Rock
- Bear Stearns
- Lehman Brothers
- Merrill Lynch
- Bank of America
- Fannie Mae and Freddie Mac
- Citibank
- AIG
36Salzburg Global Seminar
- Salzburg Global Seminar
- New Rules for Global Finance Proposals for
Regulatory Reform Topics - Capital Adequacy
- Regulatory Structure Reforms
- Oversight of Derivatives
- Risk Management
- Systemic Risk
- Europe Asia - USA
37Ewald Nowotny Governor, ONB
38Salzburg Global Seminar
- Financial Stability
- The Role of the EU the UK FSB FSA
- European Union (EU) Stimulus Plan
- UK
- Financial Stability Board (FSB) and
- FSA (Financial Services Authority)
- Starting with the EU
-
-
39The European Union
- 27 Member Nations
- European Council
- European Commission
- European Central Bank
- Maastricht Treaty - 1993
40The Euro - The Common Currency of 17 of the 27
member countries of the European Union
41The European Central Bank
- HQ Frankfort, Germany -- President
Jean-Claude Trichet
42EU Stimulus Plan
- November 2008
- 200 Billion 300 Billion
- Macro Economic Plan to Limit the Economic
Slowdown - S-T Stimulus to increase Demand and maintain
employment - L-T investment in strategic sectors (Research
Innovation)
43UK Bank Rescue Package
- October 2008
- 500 Billion 850 Billion
- Restore Market Confidence and Stabilize Banks
- S-T Loans Guarantees
- Direct Investment in Bank Capital
- Anglo Irish Bank Corp Act 2009
44Salzburg Global Seminar
- European Financial Regulatory Reform and Impact
on Banks - UK Centre for Regulatory Strategy
- Need for Coordinated Regulatory Framework Reforms
- London School of Economics Capital Adequacy
(Charles Goodhart Basel II was a miserable
failure) - Austrian Financial Market Authority
- Euro Zone Problems are Country Concerns
- We are moving in the right direction
-
-
45Salzburg Global Seminar
- Asian Financial Stability and Reform
- Asian Development Bank-Manila
- (President Kuroda)
- Financial Institutions Stability
- Deputy Governor Vanikkul, Bangkok, Thailand
-
- China Banking Regulatory Commission
- Fan Wenzhong
- My SGS A-Ha - OMG Moment
-
-
46Financial Stability Reforms - Asia
- Asian Development Bank President Kuroda
- Global Challenge is Economic Growth Economic
Reform Concurrently (Stimulus Restraint) - Implementation Challenge Within and Across All
Regions of the World
47Financial Stability Reforms Asia
- Thailand
- Financial Institutions Stability Governor
Vanikkul - 1997 Currency Crisis (Baht) Lessons Learned
- Traditional Conservative Banking Model10
Growth (ROE) - Not 25 (Western Target)
48Financial Stability Reforms - Asia
- China
- China Banking Regulatory Commission
- Fan Wenzhong
- 1997 Currency Crisis (Baht) - Russia LTCM
- NPL _at_ 25
- China Hired Banking Experts
- New Business Model Risk Management
49China Banking Regulatory Commission (CBRC)
- Basel III - Already Implemented
- Staggered Implementation (2019) (12 Average)
- Regulatory Agencies Centralized
- New Risk Management Metrics
- Risk Adjusted-ROE
- NPLs now at 1-2 Capital _at_ 12
- PLL gt 200
50Salzburg Global Seminar
- U.S. Financial Regulatory Reforms
- Center for American Progress (David Min)
- The Brookings Institution (Douglas Elliott)
- History of US Banking System Glass Steagall
- Regulatory Structure Fractured Needs Harmonized
- Large Banks Getting More Concentrated Risk
- Lesson Learned Due Diligence for PLS
-
-
-
51Salzburg Global Seminar
- US Financial Regulatory Response
- Initial Stimulus Packages (TARP) 700 Billion
- Multiple Follow-On FED Programs
- Asset-Backed Commercial Paper
- CP Funding Facility
- GSE Debt MBS Purchases
- Money Market Investor Funding Facility
- Term ABS Loan Facility
- US Govt Bond Purchases
- Over 3 Trillionand still counting
-
-
52U.S. Regulatory Reform
- US Financial Regulatory Reforms
- Financial Crisis Inquiry Commission (2009)
- Financial Crisis Inquiry Report (2011)
- Dodd-Frank Bill (July 21,2010)
- Scope to examine the causes of the crisis .
Membership 6-D 4-R. No Policy Recommendations
and no specific violations cited. -
53U.S. Regulatory Reform
- Dodd-Frank Bill Objectives
- An Act (1) to promote the financial stability of
the United States by improving accountability and
transparency in the financial system (2) to end
"too big to fail", (3) to protect the American
taxpayer by ending bailouts, (4) to protect
consumers from abusive financial services
practices, and for other purposes. - Senator Christopher Dodd (D-Conn)
Representative Barney Frank (D-Mass)
54U.S. Regulatory Reform
- Dodd-Frank Bill Accomplishments
- Key areas left unaddressed
- Derivatives
- Credit Rating Agency Reform
- Hedge Fund Accounting and Oversight
- Unlike European System of Legislative Streams
- Weaknesses
- Too Political
- Too Fragmented
- Too Broad
- Tries to do too much
55Soare the various global regulatory reform
measures good enough to prevent a future crisis?
56Salzburg Global Seminar
- NO
- The proposals are better than we had before, but
they do not go far enough
57Salzburg Global Seminar
- Other Issues Proposals
- Strengthen Corporate Governance
- Regulation of Non-Banking Institutions
- (Shadow Banking)
- Global Convergence Coordination of Regulatory
Reforms
58Salzburg Global Seminar
- Key Takeaways
- Current Regulatory Proposals Do Not go Far Enough
- (Basel III Bank Capital Adequacy - 2019)
- Too Big to Fail Banks are even Bigger - US
- Global Regulatory Structures Need To Be Reformed
- Many Derivatives Markets remain Unregulated
- Asian Banks have Learned Their Lesson Well
59Salzburg Global Seminar
- Discussion Questions
- Where Do We Go From Here?
- Critical Thinking Needed
- Leadership and Hard Decisions Need to be Made
- New Business Financial Models Needed
- or maybe a return to the old fashioned ones?
- Earn a Reasonable Return on your Investment
60Micawber Principle
- Closing Thought
- Annual income twenty pounds. Annual
expenditure 19 pounds, nineteen and six, result
happiness. - Annual income twenty pounds. Annual expenditure
twenty pounds, ought and six, result misery. - Source David Copperfield, by Charles Dickens
(1850). Quote by Wilkins Micawber, modeled on
Dickens father, John Dickens who was incarcerated
in debtors prison after failing to meet his
creditors demands.
61Salzburg Global Seminar