Shadow Financial Regulatory Committee
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Event Summary

The Shadow Financial Regulatory Committee (SFRC), an independent group of experts sponsored by AEI, released its latest findings at a press luncheon on Monday. Robert Eisenbeis of Cumberland Advisors began by presenting the first of three statements published by the committee, which encouraged regulators to narrow the range of assets covered by the Basel Committee liquidity coverage ratio to currency and deposits held at central banks. Eisenbeis argued that the current Basel III liquidity ratio requirements have been watered down to reflect the interests of individual governments and are not sound financial regulatory policy.

AEI's Peter Wallison then discussed the release of the Qualified Mortgage (QM) standard by the Consumer Financial Protection Bureau. Wallison stressed that the QM rule protects neither the homeowner nor the loan originator. Additionally, Wallison suggested that the legal-liability standard that the QM rule places on originators would hinder competition in the home-loan market.

Finally, Richard J. Herring of the University of Pennsylvania issued committee recommendations for improving bank capital adequacy disclosure. Herring outlined current risk-weighted capital adequacy standards' high susceptibility to manipulation, and suggested amendments to the Basel Committee's proposed leverage ratio. He also posited that recent developments in regulatory circles indicated growing support for a simpler leverage ratio.

--Andre Gardiner

Event Description

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: Basel III implementation, bank capital leverage ratios, government-sponsored enterprises and qualified mortgages, and Securities and Exchange Commission issues. In a briefing 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.

Agenda

12:00 PM
Registration and Luncheon

12:30 PM
Press Briefing
Panelists:
Richard J. Herring, (co-chairman), University of Pennsylvania
George G. Kaufman, (co-chairman), Loyola University Chicago
Sheila Bair, Pew Charitable Trusts
Kenneth W. Dam, University of Chicago Law School and Brookings Institution
Franklin Edwards, Columbia University
Robert A. Eisenbeis, Cumberland Advisors
Edward Kane, Boston College
Kenneth E. Scott, Stanford Law School
Chester Spatt, Carnegie Mellon University
Peter J. Wallison, AEI

1:30 PM
Adjournment

Event Contact Information

For more information, please contact Emily Rapp at [email protected], 202.419.5212.

Media Contact Information

For media inquiries, please contact [email protected], 202.862.5829.

Speaker Biographies

Sheila Bair served as chairman of the Federal Deposit Insurance Corporation (FDIC) from June 2006 through June 2011. She presided over one of the most tumultuous periods in the history of the nation’s banking system, working to bolster public confidence and financial system stability. She has been a leading advocate and innovator of policies to end the doctrine of “too-big-to-fail” and taxpayer bailouts.  She has been lauded in editorials ranging from The New York Times to The Wall Street Journal for her fierce advocacy of the public interest, and, in the words of Time magazine, being “the little guy’s protector in chief.” She has received numerous honors, including the John F. Kennedy Profiles in Courage Award, was twice named by Forbes Magazine 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 in 2006, 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.”  She is a member of the International Advisory Council to the China Bank Regulatory Commission and also serves on the Board of Host Hotels.

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 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 a 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 he served for 13 years on the board of Alcoa.

Franklin Edwards is the Arthur F. Burns Chair in Free and Competitive Enterprise and a professor of finance and economics at the Columbia Business School. He has served as a visiting scholar at AEI and senior economist at the Office of the Comptroller of the Currency. His research interests include hedge funds, corporate governance, financial markets and regulation, and derivatives markets. Edwards is the author of "The New Finance: Regulation and Financial Stability" and the textbook "Futures and Options." He has also authored numerous articles dealing with financial institutions, hedge funds, corporate governance, derivatives markets, energy markets, and financial regulation.

Robert A. Eisenbeis is the vice chairman and chief monetary economist at Cumberland Advisors, where he advises the company's asset managers on US economic and financial market developments and their implications for investment and trading strategies. Eisenbeis was formerly executive vice president and director of research at the Federal Reserve Bank of Atlanta, where he advised the bank's president on monetary policy for Federal Open Market Committee deliberations and was in charge of basic research and policy analysis. Previously, he was the Wachovia Professor of Banking at the Kenan-Flagler School of Business at the University of North Carolina at Chapel Hill. He has also held senior positions at the Federal Reserve Board and Federal Deposit Insurance Corporation. Eisenbeis is a member of the Financial Economists Roundtable and a fellow of the National Association of Business Economics.
Richard J. Herring is a cochair of the Shadow Financial Regulatory Committee as well as 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. His research areas include international banking, international finance, and money and banking. He is the co-editor of the Brookings-Wharton papers on financial services, published by the Brookings Institution Press, and is on the editorial board of numerous journals. Herring has been a trustee of Scudder New York Funds since 1990.

Edward Kane is the James F. Cleary Professor of Finance at Boston College. Previously, he held the Everett D. Reese Chair of Banking and Monetary Economics at Ohio State University. He also consults for the World Bank, is a senior fellow in the Federal Deposit Insurance Corporation's Center for Financial Research, and has been a longtime research associate of the National Bureau of Economic Research. Kane has served as a consultant for numerous agencies, including the Federal Home Loan Bank Board, the International Monetary Fund, the Federal Reserve, the Congressional Budget Office, the Joint Economic Committee, and three foreign central banks. He served for 12 years as a trustee and member of the finance committee of Teachers Insurance and Annuity Association of America, is a past president and fellow of the American Finance Association, and is a former Guggenheim Fellow. Kane was also president of the International Atlantic Economic Society and the North American Economics and Finance Association. Besides authoring three books, he has published widely in professional journals and currently serves on seven editorial boards.

George G. Kaufman is a cochair of the Shadow Financial Regulatory Committee and the John F. Smith, Jr. Professor of Finance and Economics at Loyola University Chicago, where he has worked since 1981. Previously, he was a visiting scholar and the acting director of research at the Office of the Comptroller of the Currency and was the deputy to the assistant secretary for economic policy at the US Department of the Treasury. He has also worked at the Federal Reserve Bank of Chicago in numerous positions, including as senior economist and assistant vice president. During his career, Kaufman has taught at the University of California–Berkeley, Stanford University, the University of Oregon, and the University of Southern California. He is the executive director of the Financial Economists Roundtable, co-editor of the Journal of Financial Stability, founding editor of the Journal of Financial Services Research, and editor of Research in Financial Services.

Kenneth E. Scott is the Ralph M. Parsons Professor of Law and Business Emeritus at Stanford Law School. He is a leading scholar in the fields of corporate finance reform and corporate governance and is well-versed in federal deposit insurance issues and federal banking regulation. As a senior research fellow at the Hoover Institution, he concentrates on legislative and policy developments related to comparative corporate governance, bank regulation, and deposit-insurance reform. Scott has extensive consulting experience, including turns with the World Bank, the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, and, most recently, 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.

Chester Spatt is the Kenneth B. and Pamela R. Dunn Professor of Finance and the director of the Center for Financial Markets at the Tepper School of Business at Carnegie Mellon University. He has been at Carnegie Mellon 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 researched and written extensively on market structure, taxation and asset allocations, pricing and valuation, and the impact of information in the marketplace. Additionally, he is a member of the Financial Economists Roundtable and a fellow at the Teachers Insurance and Annuity Association of America and College Retirement Equities Fund. Spatt has been on the editorial board of numerous academic journals, including the Journal of Financial Markets, Real Estate Economics, and the Journal of Financial and Quantitative Analysis. He was a founder and the second executive editor of the Review of Financial Studies, and he 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 is 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 a 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 Treasury Department'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.

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