Press

“In Pillar 2, there’s a couple of really key things that regulators already can use and should have been using for decades,” said Mayra Rodriguez Valladares, managing principal of the consultancy MRV Associates. Read more

“Regulatory consultant Mayra Rodríguez Valladares argues that bank risk managers need to “go back to basics” and do an assessment known as a “gap analysis”, in which liabilities and assets are grouped by their duration to see at what point in time the bank will start having more liabilities than it can easily meet. From there, the next step is to forecast what will happen if rates continue to move, she says. Traditionally, such tests looked at 25- or 50-basis-point interest rate moves, but “right now, they should be doing [asking] what if rates go up by 100 basis points or 200 basis points in a short period of time,” she says. Bank risk managers would also do well to study other periods with high or rapidly rising rates, such as the 1980s, to make sure they are covering the right bases, says Rodríguez Valladares. As she puts it: “Before anybody goes into a risk management position, they should be required to take a history class.” Read more here

Rodríguez Valladares recommended changes to banks and to Federal Reserve supervision.  You may listen to her testimony before the Subcommittee on Economic Policy here.

MRV Associates Managing Principal Mayra Rodriguez Valladares says US regional banks need to be  more transparent and expects additional legislation to get rid of a law that eliminated banks under $250 billion as systemically important. She speaks to Bloomberg’s Romaine Bostick on “Bloomberg Markets: The Close” on May 11. Hear the segment here.

Mayra Rodriguez Valladares, a financial regulations expert and managing partner at MRV Associates, said any risk-weight change would hinge on how far U.S. credit ratings would drop following a default, but also that banks would have few good choices in that scenario. “You can try to raise capital, which would be horrifying in the middle of a default, or you can try to jettison riskier assets like securitizations or other investments that require more capital,” Rodriguez Valladares said. “It is just uncharted territory.” Read more here.

“After what happened with First Republic, banks don’t want to buy any other bank before the FDIC takes over,” said Mayra Rodríguez Valladares, a financial risk consultant at MRV Associates who trains bankers and regulators. “It’s cheaper, the stock price goes down and you don’t have the natural problems in M&A (mergers and acquisitions) negotiations that may not end in a deal.” Read more