BU Now » Uncontrolled Risk http://blogs.bu.edu/bunow News, information and research from Boston University Wed, 21 Sep 2011 18:14:24 +0000 en hourly 1 http://wordpress.org/?v=3.1.4 Goldman executives questioned http://blogs.bu.edu/bunow/2010/07/01/goldman-executives-questioned/ http://blogs.bu.edu/bunow/2010/07/01/goldman-executives-questioned/#comments Thu, 01 Jul 2010 21:05:43 +0000 Dick Taffe http://blogs.bu.edu/bunow/?p=6239 Financial Crisis Inquiry ComissionThe Congressionally appointed Financial Crisis Inquiry Commission exploring the 2008 crash questioned executives from Goldman Sachs, the world’s most profitable bank, about how much it makes trading derivatives — those complex financial bets that helped bring down the economy.  Goldman Chief Financial Officer David Viniar said they had no way of determining its derivatives data separately from trading in cash securities. But Mark Williams, a former Federal Reserve bank examiner who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says he doesn’t buy it.

“For Goldman’s CFO to go before the Financial Crisis Inquiry Commission and claim he doesn’t know what Goldman makes in derivatives trading is the equivalent of a major league pitcher not knowing his ERA.  Such a claim is shocking given how lucrative and central derivatives trading is to Goldman’s core business model.”

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

]]> http://blogs.bu.edu/bunow/2010/07/01/goldman-executives-questioned/feed/ 0 AIG bill still hitting taxpayers http://blogs.bu.edu/bunow/2010/06/10/aig-bill-still-hitting-taxpayers/ http://blogs.bu.edu/bunow/2010/06/10/aig-bill-still-hitting-taxpayers/#comments Thu, 10 Jun 2010 21:42:08 +0000 Dick Taffe http://blogs.bu.edu/bunow/?p=5890 AIG logoThe Congressional Oversight Panel says in a scathing report that the government failed to exhaust all options before bailing out the insurance giant American International Group – although the rescue did help the financial system avert collapse.  Nonetheless, the watchdog panel says taxpayers may never be paid back all of the $182 billion funneled to support AIG.  Former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says the report speaks to the elevated role that policymakers have in conducting stronger risk management.

“Taxpayers deserve better decision making that incorporates basic risk-management tools, including risk measurement, worst-case forecasting, monitoring, and frequent reporting. With significantly more taxpayer money at risk, now it is time for policymakers to exercise better risk management.”

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

]]> http://blogs.bu.edu/bunow/2010/06/10/aig-bill-still-hitting-taxpayers/feed/ 0 Financial regulatory reform crunch time http://blogs.bu.edu/bunow/2010/05/24/financial-regulatory-reform-crunch-time/ http://blogs.bu.edu/bunow/2010/05/24/financial-regulatory-reform-crunch-time/#comments Mon, 24 May 2010 16:01:50 +0000 Dick Taffe http://blogs.bu.edu/bunow/?p=5663 U.S. Capitol buildingCapitol Hill negotiators from the House and Senate committees dealing with financial regulatory reform are getting down to the details of working out differences between the bills passed in respective chambers, with Democrats holding the majority votes in both.  Former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says the Fed simply isn’t equipped to take on any new oversight role over banks — as the Senate bill dictates.

“At the Fed, bank examiners continue to be underpaid, lack advanced training in the ways of Wall Street, and are saddled with risk-measurement systems that lag the Street.”

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

]]> http://blogs.bu.edu/bunow/2010/05/24/financial-regulatory-reform-crunch-time/feed/ 0 Congress close to financial reg reform http://blogs.bu.edu/bunow/2010/05/21/congress-close-to-financial-reg-reform/ http://blogs.bu.edu/bunow/2010/05/21/congress-close-to-financial-reg-reform/#comments Fri, 21 May 2010 20:40:49 +0000 Dick Taffe http://blogs.bu.edu/bunow/?p=5652 bankrollThe most extensive overhaul of financial regulations since the 1930s has cleared its big hurdle in the U.S. Senate and how can head to President Obama for a signature after a conference committee works out remaining differences between the House and Senate versions.  But former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, cautions that only four of the world’s 30 global financial giants that could take down the world’s economy are covered under this reform bill — yet the problems are globally systemic.

“The U.S. is now in the position to lead again but will need to encourage other nations to follow.  Until global uniformity is reached, high systemic risk will remain.”

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

]]> http://blogs.bu.edu/bunow/2010/05/21/congress-close-to-financial-reg-reform/feed/ 0 German trading ban roils markets http://blogs.bu.edu/bunow/2010/05/19/german-trading-ban-roils-markets/ http://blogs.bu.edu/bunow/2010/05/19/german-trading-ban-roils-markets/#comments Wed, 19 May 2010 19:29:18 +0000 Dick Taffe http://blogs.bu.edu/bunow/?p=5588 bond salesBecause no one followed suit, Germany’s unlateral ban on “naked” short selling of European government bonds - speculative bets that prices will fall on borrowed assets which then can be sold back to the lender with the speculator pocketing the difference –rocked global markets.  Mark Williams, who teaches finance at the BU School of Management and is author of “Uncontrolled Risk” about the lessons to be learned from the fall of Lehman Brothers, says this shows that systemic risk remains high in our global financial market.

“Short sellers are a symptom not the cause of our fragile financial system.  The action that will be most effective is coordinated efforts by G-20 powers to enact a global financial reform.  Efforts being made in the U.S. will not solve the systemic risk that Greece has reminded us still exists.”

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

]]> http://blogs.bu.edu/bunow/2010/05/19/german-trading-ban-roils-markets/feed/ 0