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The Shadow Financial Regulatory Committee (SFRC), an independent group of experts sponsored by AEI, released its latest findings at a press luncheon on Monday. Richard Herring of the University of Pennsylvania began by presenting a statement that recommends replacing minimum liquidity requirements for banks with a simple liquidity indicator that measures a bank's ability to meet its financial obligations during a stress period with its liquid assets.
Marshall Blume, also of the University of Pennsylvania, continued by summarizing the committee's reaction to the Office of Financial Research report titled "Asset management and financial stability," which Blume claims fails to provide sufficient justification for designating asset managers as systemically important.
AEI's Peter Wallison then turned to the Department of Justice's $13 billion settlement with JPMorgan. Wallison voiced four primary reservations the SFRC has with the settlement: the government's power over the bank might mean the bank has to settle, the lack of transparency in the settlement, the illogic of punishing a firm for the actions of companies it acquired at the behest of the government, and the appearance that the government was retaliating against a critic.
In closing, Richard Herring of the University of Pennsylvania described a letter he and Sheila Bair of Pew Charitable Trusts had drafted to the International Swaps and Derivatives Association (ISDA), in which they requested that the ISDA conform its rules on what happens to derivatives in the event of bankruptcy to the Federal Deposit Insurance Corporation rule, which requires a one-day stay.
The Shadow Financial Regulatory Committee (SFRC) is a group of publicly recognized independent experts on the financial services industry — including experts in banking, insurance, and securities — who meet regularly to study and critique regulatory policies affecting this sector of the economy.
During closed sessions before the luncheon, committee members will discuss a variety of current financial-regulation issues: bank liquidity regulations, monetary penalties imposed on financial institutions, banking developments in Europe, and the Office of Financial Research report on potential systemically important financial institution (SIFI) designations for asset-management firms. In a luncheon following the sessions, SFRC members will present the adopted policy statements and answer related questions.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Registration and Lunch
Richard J. Herring, (cochairman), The Wharton School of the University of Pennsylvania
George G. Kaufman, (cochairman), Loyola University Chicago
Sheila Bair, Pew Charitable Trusts
Marshall Blume, University of Pennsylvania
Kenneth W. Dam, University of Chicago Law School and Brookings Institution
Kenneth E. Scott, Stanford Law School
Chester Spatt, Carnegie Mellon University
Peter J. Wallison, AEI
For more information, please contact Brian Marein at email@example.com, 202.862.5890.
For media inquiries, please contact MediaServices@aei.org, 202.862.5829.
Sheila Bair served as chairman of the Federal Deposit Insurance Corporation (FDIC) from June 2006 through June 2011. She has received numerous honors, including the John F. Kennedy Profiles in Courage Award, was twice named by Forbes as the second most powerful woman in the world after German Chancellor Angela Merkel, and appeared on the cover of Time magazine. In 2011, she was named by Harvard University and The Washington Post Magazine as one of seven of America’s Top Leaders. Before joining the FDIC, Bair was the Dean's Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts–Amherst beginning in 2002. Other career experience includes serving as assistant secretary for financial institutions at the US Department of the Treasury (2001–02); senior vice president for government relations of the New York Stock Exchange (1995–2000); commissioner and acting chairman of the Commodity Futures Trading Commission (1991–95); and research director, deputy counsel, and counsel to former Senate majority leader Robert Dole (1981–88). Bair continues her work on financial policy issues as a senior adviser to the Pew Charitable Trusts and as the chairman of the Systemic Risk Council, a public interest group of prominent former government officials and financial experts that monitors progress on financial reform. She writes a regular column for Fortune magazine and is the author of the New York Times bestseller “Bull by the Horns: Fighting to Save Main Street from Wall Street, and Wall Street from Itself” (Free Press, 2012). She serves on the boards of Host Hotels, the Atlantic Council, and the Volcker Institute for Government Effectiveness, and is a member of the International Advisory Council to the China Bank Regulatory Commission.
Marshall Blume is the Howard Butcher III Professor Emeritus of Financial Management and the director emeritus of the Rodney L. White Center for Financial Research at the Wharton School of the University of Pennsylvania, where he has worked since 1967. He researches financial markets, investments, investment behavior, and fixed-income securities. Blume is on the editorial boards of the Journal of Portfolio Management and the Journal of Fixed Income. He is on the board of the Measey Foundation and is an independent director of various CPA real-estate investment trusts.
Kenneth W. Dam is the Max Pam Professor Emeritus of American and Foreign Law and a senior lecturer at the University of Chicago Law School. He served as deputy secretary in the US Department of the Treasury from 2001 to 2003 and at the US Department of State from 1982 to 1985. Previously, he was the executive director of the Council on Economic Policy and assistant director for national security and international policy at the Office of Management and Budget. Dam's work in the private sector includes serving as IBM's vice president for law and external relations and as president and CEO of the United Way of America. He is an honorary member of the board of the Brookings Institution and serves as a nonresident senior fellow of that organization. Dam is also a board member of the Committee for Economic Development and was formerly chairman of the German-American Academic Council. He has been a board member of numerous nonprofit institutions and served for 13 years on the board of Alcoa.
Richard J. Herring is cochair of the Shadow Financial Regulatory Committee. He is also the Jacob Safra Professor of International Banking and codirector of the Wharton Financial Institutions Center at the Wharton School of the University of Pennsylvania, where he has worked since 1972. He is likewise executive director of the Financial Economists Roundtable. His research areas include international banking, international finance, and money and banking. He has written more than 125 articles, monographs, and books and his research has been sponsored at various times by the National Science Foundation, the Ford Foundation, the Sloan Foundation, the Pew Charitable Trusts, and several different international organizations.
George G. Kaufman is the cochair of the Shadow Financial Regulatory Committee. He is also the John Smith Professor of Finance and Economics at Loyola University Chicago, where he has taught since 1981. He previously taught at the University of Oregon and was a research officer at the Federal Reserve Bank of Chicago. He was likewise a visiting professor at Stanford University; the University of California, Berkeley; and the University of Southern California. He was a visitor at the Federal Reserve Bank of San Francisco and at the Comptroller of the Currency, where he was acting director of research. He also served as a deputy to the assistant secretary of the US Department of the Treasury. Kaufman has published widely in leading professional journals and was a founding editor of both the Journal of Financial Services Research and Journal of Financial Stability. He has served as president of the Midwest Finance Association and the North American Economic and Finance Association; is president of the Western Economic Association; and is a past director of the American Finance Association.
Kenneth E. Scott is the Ralph M. Parsons Professor of Law and Business emeritus at Stanford Law
School and a senior research fellow at the Hoover Institution. He is a prominent scholar in the fields of corporate finance reform and corporate governance, federal deposit insurance issues, and federal banking regulation. He has recently coauthored and coedited books on the financial crisis and bailout reforms. Scott has consulted extensively, including with the World Bank, the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, and the National Association of Securities Dealers. He is also a member of the Financial Economists Roundtable and the State Bar of California's Financial Institutions Committee. Before joining the Stanford Law School faculty in 1968, Scott was general counsel to the Federal Home Loan Bank Board and chief deputy savings and loan commissioner of California. He has practiced law in New York and Los Angeles.
Chester Spatt is the Kenneth B. and Pamela R. Dunn Professor of Finance at Carnegie Mellon, where he has taught since 1979. From 2004 to 2007, Spatt served as the chief economist and director of the Office of Economic Analysis for the US Securities and Exchange Commission. He has written extensively on financial regulation, market structure, taxation and asset allocation, pricing and valuation, and the impact of information in the marketplace. Additionally, he is a member of the Federal Reserve’s Model Validation Council, the Systemic Risk Council, and the Financial Economists Roundtable. He is also senior economic adviser to Kalorama Partners and a fellow at the TIAA-CREF Institute. Spatt was a founder and the second executive editor of the Review of Financial Studies, is past president of both the Western Finance Association and Society for Financial Studies, and served as a member of the economic advisory board for NASDAQ from 2000 to 2002.
Peter J. Wallison holds the Arthur F. Burns Chair in Financial Policy Studies at AEI, where he codirects the program on financial market studies. He was also a cochair of the Pew Financial Reform Task Force and a member of the congressionally authorized Financial Crisis Inquiry Commission. Wallison previously practiced banking, corporate, and financial law at Gibson, Dunn & Crutcher LLP in New York and Washington, DC. In 1986 and 1987, Wallison was White House counsel to former president Ronald Reagan. From 1981 to 1985, he was general counsel of the US Department of the Treasury, where he played a significant role in the development of the Reagan administration's proposals for deregulation in the financial services industry. He also served as general counsel to the Depository Institutions Deregulation Committee and participated in the US Department of the Treasury’s efforts to deal with the debt held by less-developed countries. Between 1972 and 1976, Wallison was special assistant to former New York governor Nelson A. Rockefeller and, subsequently, counsel to Rockefeller when he was vice president of the US.