Articles

Total asset-backed securities issuance (ABS) in the United States grew 140% in the period of 2008-2018.  Yet, the first four months of 2019 show a decline in total ABS issuance.

The Financial Stability Oversight Council, led by U.S. Secretary of the Treasury Steve Mnuchin, needs to conduct a thorough analysis of banks’ and non-banks’ exposures to leveraged lending and to collateralized leveraged loan obligations (CLOs), where the majority of leveraged loans are packaged.

The recently created Subcommittee on Diversity and Inclusion of the House Financial Services Committee held a hearing today to examine data and research about the social and economic benefits that can be achieved when organizations implement robust diversity and inclusion strategies. “Diversity and inclusion isn’t just the right thing to do—it’s good for business and our economy!” exclaimed Representative Joyce Beatty, the chair of the subcommittee.

As auto lending and delinquencies continue to rise, more than ever, there is an urgent need to eliminate discrimination against women and minorities in lending and auto insurance premia.

Money from banks, non-banks, and realtors is flowing to Washington politicians at record highs. Financial industry spending has increased to levels even higher than they were before the financial crisis, and the spending in this cycle was the highest yet for a non-presidential year.

The challenge for financial institutions is how to decide which of the hundreds of different geopolitical conflicts to focus on. They have to learn to cope with lots of noise, create scenarios, and determine how the market will translate different situations into shocks that impact portfolios.

When Novartis, Tenneco, and Volkswagen chief compliance officers share advice publicly about reforming corporate culture, bank executives would do well to pay close attention. If bank employees ask who is in charge of bank culture, that is the wrong question to ask. Everyone should be responsible.

There is no time for schadenfreude over potentially weaker European bank earnings. The U.S. and European financial sectors and economies are significantly intertwined. European banks are amongst the biggest derivatives participants and lenders in the U.S.

During last week’s House Financial Services Committee hearing, Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis, Representative Jim Himes (D-CT) asked the seven chief executive officers of America’s largest banks “What product, financing mechanism, or market is do you think is generating systemic risk which we should pay attention to?” Almost all of them mentioned that leveraged lending was a top product that we should focus on.

Another week. Another Deutsche Bank scandal. Regulators and legislators globally need to recognize that Deutsche Bank’s recidivism is an illness. Significantly higher fines, sending executives to jail, additional capital and risk management requirements, or closing it down are the only cure.

Deutsche Bank’s risk management capabilities should matter in any country where Deutsche Bank has legal entities. Possible Trump bank fraud raises many questions for legislators, regulators, and taxpayers on both sides of the Atlantic.

Strategic Treasurer and TD Bank’s Treasury Perspectives Survey found that financial and non-financial corporations’ optimism about business and economic conditions has waned in 2019. Additionally, companies have not benefited from Trump’s tax reform as much as they had hoped.

It is critical that legislators and regulators explain to the public what metrics are being used to determine whether indeed Wells Fargo has implemented the laundry list of promises to improve risk management. Mea culpas are insufficient without evidence of contrition that will help those harmed.

In a disappointing decision, the Federal Reserve Board will limit its use of the “qualitative objection” in Dodd-Frank’s Comprehensive Capital Analysis and Review. This reduces transparency to the market about potential risk management and capital planning problems at systemically important banks.

Credit to non-financial corporations and governments in emerging markets has soared over the last decade and is at record highs.  In a low interest rate environment in most advanced economies, lending by both foreign and domestic banks and non-banks to emerging market borrowers is likely to continue rising for the foreseeable future.

Advantages and challenges abound for investment professionals focusing on big data, large data sets analyzed computationally,  and alternative data, data sets obtained from less traditional sources, such as social media, for investment analysis.