BU Now » stress tests

Stress-test report cards and management reviews for banks

Dick Taffe — Mon, 08 Jun 2009 14:15:38 +0000

Federal bank regulators today say yea or nay to the capital-raising plans at nine of the nation’s largest banks. But today also is the deadline for banks to report an in-depth review of their management for approval by the regulators. School of Management Professor James Post, an authority on corporate governance, can discuss long-term impact of the unprecedent management reviews.

Contact James Post, 617-353-4162, jepost@bu.edu

“Stress Tests” Done, Now What?

Dick Taffe — Mon, 11 May 2009 14:09:59 +0000

With the government’s “stress tests” now completed on the nation’s largest banks, School of Management risk expert Mark T. Williams, a former Federal Reserve bank examiner, looks at the lessons learned and what happens next. “Stronger capital requirements, better regulatory risk oversight, and banks with a stronger handle on fundamental risk-management principles should help reduce the chance of another banking meltdown,” he says in a Reuters commentary.

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

Stress tests: Eliminating a “systemic uncertainty”

Dick Taffe — Tue, 05 May 2009 20:40:30 +0000

Former deputy Comtroller of the Currency Robert R. Bench, now senior fellow at the School of Law’s Morin Center for Banking and Financial Law, says the Fed’s “stress tests” on the nation’s largest banks will help clarify the murky state of the industry.

“The very good news with these stress-test results is that policymakers have acquired a solid view of the conditions of our largest financial institutions face going forward and the amounts of capital cushion necessary to meet those conditions.

“Policymakers had one last shot at getting this right and they are going at it with an abundance of caution, ordering those institutions to get much more tangible common equity. A systemic uncertainty is being eliminated.”

Contact Robert Bench, 617-353-5428, bobbench@bu.edu

Treasury’s bank “stress tests” becoming a mess

Dick Taffe — Mon, 27 Apr 2009 20:56:09 +0000

School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and former counsel to the Fed Board of Governors, says Treasury’s “stress tests” for top U.S. banks is a mess because it only disclosed the test methodology just before the test results will be made public.

“For credibility purposes, this methodology would have been better had it been released at the beginning of the process rather than at the end. On the eve of the stress-test results release it reads more like a rationalization than a game plan.

“Indeed, the Treasury maneuvered itself into an almost impossible situation with the way it handled this issue. Absolve the banks and who would believe the results. Name the capital-deficient banks and the only thing that keeps them alive is the generosity of the U.S. taxpayer. Quite a mess.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu