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Managing Risk in the Financial System
Managing Risk in the Financial System makes important and timely contributions to our knowledge and understanding of banking law, financial institution restructuring and related considerations, through the production of an innovative, international and interdisciplinary set of contributions which link together the law and policy issues surrounding systemic risk and crisis management.
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Critical Acclaim
Contributors
Contents
More Information
Managing Risk in the Financial System makes important and timely contributions to our knowledge and understanding of banking law, financial institution restructuring and related considerations, through the production of an innovative, international and interdisciplinary set of contributions which link together the law and policy issues surrounding systemic risk and crisis management.
The recent financial crisis has exposed both the banking industry and financial system safety-net players in many countries to a considerable level of distress as well as economic and reputational damage. These circumstances have heightened the need for policymakers to consider remedial measures under a broad umbrella that encompasses inter alia prompt corrective actions, early closure of distressed entities, deposit insurance, bail-outs, state-aid, bank resolution and restructuring techniques. These essays provide an important contribution to research in this area, at a crucial time in the debate around the future financial industry.
This unique and detailed volume should be of considerable interest to students of law, economics and finance, law practitioners and policymakers in central banks and ministries of finance. Law, business and finance faculties will benefit from having this book in their collections, as will deposit protection agencies and regulatory agencies.
The recent financial crisis has exposed both the banking industry and financial system safety-net players in many countries to a considerable level of distress as well as economic and reputational damage. These circumstances have heightened the need for policymakers to consider remedial measures under a broad umbrella that encompasses inter alia prompt corrective actions, early closure of distressed entities, deposit insurance, bail-outs, state-aid, bank resolution and restructuring techniques. These essays provide an important contribution to research in this area, at a crucial time in the debate around the future financial industry.
This unique and detailed volume should be of considerable interest to students of law, economics and finance, law practitioners and policymakers in central banks and ministries of finance. Law, business and finance faculties will benefit from having this book in their collections, as will deposit protection agencies and regulatory agencies.
Critical Acclaim
‘Managing Risk in the Financial System offers fresh and essential reading on the Global Financial Crisis. The coverage is unique in its scope – offering a close examination of fundamental concepts such as the nature of systemic risk; consideration of the impact of systemic crisis on both private institutions and national governments; and critique of popular reform proposals such as living wills, resolution funds and capital adequacy. Contributors to this volume are internationally recognized experts who offer sharp assessments of both the causes of the crisis and the proposed reforms.’
– Heidi Mandanis Schooner, Columbus School of Law, US
‘Incisive, authoritative and thoughtful, this important and timely collection of papers exploring the unresolved issues left by the recent global financial turmoil, will undoubtedly shape the policy responses to come. Interdisciplinary in approach and wide-ranging in jurisdictional scope, it draws together influential commentators, practitioners and regulators, to create a new milestone in the search for the fundamentals of a more stable global financial system.’
– Eva Lomnicka, King’s College London, UK
‘This book contains a large number of chapters, nearly 30 in all, by acknowledged experts on various aspects of the recent financial crisis. Whichever aspect of this crisis may interest you, such as bank taxes, deposit insurance, TBTF and how to respond, cross-border issues, and many, many others, you will find chapters that are both authoritative and stimulating in this collection. The editors are to be congratulated not only on their selection of authors but also on the speed with which they have taken them from conference presentation to book chapter.’
– Charles Goodhart, London School of Economics, UK
– Heidi Mandanis Schooner, Columbus School of Law, US
‘Incisive, authoritative and thoughtful, this important and timely collection of papers exploring the unresolved issues left by the recent global financial turmoil, will undoubtedly shape the policy responses to come. Interdisciplinary in approach and wide-ranging in jurisdictional scope, it draws together influential commentators, practitioners and regulators, to create a new milestone in the search for the fundamentals of a more stable global financial system.’
– Eva Lomnicka, King’s College London, UK
‘This book contains a large number of chapters, nearly 30 in all, by acknowledged experts on various aspects of the recent financial crisis. Whichever aspect of this crisis may interest you, such as bank taxes, deposit insurance, TBTF and how to respond, cross-border issues, and many, many others, you will find chapters that are both authoritative and stimulating in this collection. The editors are to be congratulated not only on their selection of authors but also on the speed with which they have taken them from conference presentation to book chapter.’
– Charles Goodhart, London School of Economics, UK
Contributors
Contributors: J.-H. Binder, R.R. Bliss, L.C. Buchheit, C. Enoch, G.G.H. Garcia, D.F. Gray, M. Gulati, G. Gunnarsson, K. Hj Arshad, A.A. Jobst, A. Kabiri, G.G. Kaufman, I. Kokkoris, J.R. LaBrosse, R.M. Lastra, D.G. Mayes, J.F. McCollum, J.F. McEldowney, I. Moosa, M.J. Nieto, G. Ogunleye, R. Olivares-Caminal, K. Papadakis, Y. Redjah, R.J. Rosen, J. Roy, J.P. Sabourin, S. Schich, J. Selody, A. Sighvatsson, D. Singh, J. Snape, R. Turk-Ariss, G.A. Walker, L.D. Wall, A.E. Wilmarth, Jr., G. Wood
Contents
Contents:
Foreword: The 2010 Banking Law Symposium on Managing Systemic Risk
Charles Enoch
Special Address: The Deposit Insurer’s Role in Transitioning from a Government Deposit Guarantee
Jean Pierre Sabourin
Preface: It Has Been ‘A Hard Day’s Night’
John Raymond LaBrosse, Rodrigo Olivares-Caminal and Dalvinder Singh
PART I: SYSTEMIC RISK
1. Investor Behaviour in the Period Before the 2007–08 Financial Crisis
Richard J. Rosen
2. The Nature of Systemic Risk
Jack Selody
3. The Government as Guarantor of Last Resort: Benefits, Costs and the Case for Premium Charges
Sebastian Schich
4. The Troubled Asset Relief Program: Has Forbearance as Far as the Eye Can See Saved the US Economy?
Gillian G.H. Garcia
5. Why is the Canadian Banking System so Remarkably Stable? A Comparative Analysis with the US
Jean Roy, Rima Turk-Ariss and Yenni Redjah
6. Systemic Contingent Claim Analysis – A Model Approach to Systemic Risk
Dale F. Gray and Andreas A. Jobst
7. Tax and the City: The UK’s Proposals for a Bank Levy
John Snape
PART II: SOVEREIGN DEBT
8. Iceland’s Financial Disaster and its Fiscal Impact
Arnór Sighvatsson and Gunnar Gunnarsson
9. The Greek Tragedy: Is There a Deus ex Machina?
Ioannis Kokkoris, Rodrigo Olivares-Caminal and Kiriakos Papadakis
10. Restructuring a Nation’s Debt
Lee C. Buchheit and Mitu Gulati
PART III: ADDRESSING THE PROBLEM OF ‘TOO-BIG-TO-FAIL’
11. Firm Stability and System Stability: The Regulatory Delusion
Geoffrey Wood with Ali Kabiri
12. ‘Living Wills’: Putting the Caboose Before the Engine and Designing a Better Engine
George G. Kaufman
13. Finding a Solution to the ‘Too-Big-To-Fail’ Problem
Arthur E. Wilmarth, Jr.
14. ‘Too-Big-To-Fail’ – Can Alternative Resolution Regimes Really Remedy Systemic Risk in Large Financial Institutions’ Insolvency?
Jens-Hinrich Binder
15. To Divest or Not to Divest: That is the Question...
Ioannis Kokkoris
PART IV: CROSS-BORDER ISSUES
16. Resolving Large Complex Financial Institutions Within and Across Jurisdictions
Robert R. Bliss and George G. Kaufman
17. From Consolidated Supervision to Consolidated Resolution
Rosa M. Lastra and Rodrigo Olivares-Caminal
18. Creating an EU-Level Supervisor for Cross-border Banking Groups: Issues Raised by the US Experience with Dual Banking
Larry D. Wall, María J. Nieto and David G. Mayes
PART V: PRUDENTIAL REGULATION
19. Capital and Liquidity Reform – A New Global Agenda
George A. Walker
20. Basel II to Basel III: A Great Leap Forward?
Imad Moosa
PART VI: COUNTRY CASE STUDIES
21. The US Architecture of Bank Regulation and Supervision: Recent Reforms in their Historical Context
Dalvinder Singh
22. An Evaluation of the Canadian Financial Safety Net During the Global Financial Crisis
John Raymond LaBrosse and James F. McCollum
23. Financial Safety Net Reform in Nigeria
Ganiyu Ogunleye
24. Islamic Deposit Insurance System: The Malaysian Model
Khairuddin Hj Arshad
25. Managing Financial Risk: The Precautionary Principle and Protecting the Public Interest in the UK
John F. McEldowney
Index
Foreword: The 2010 Banking Law Symposium on Managing Systemic Risk
Charles Enoch
Special Address: The Deposit Insurer’s Role in Transitioning from a Government Deposit Guarantee
Jean Pierre Sabourin
Preface: It Has Been ‘A Hard Day’s Night’
John Raymond LaBrosse, Rodrigo Olivares-Caminal and Dalvinder Singh
PART I: SYSTEMIC RISK
1. Investor Behaviour in the Period Before the 2007–08 Financial Crisis
Richard J. Rosen
2. The Nature of Systemic Risk
Jack Selody
3. The Government as Guarantor of Last Resort: Benefits, Costs and the Case for Premium Charges
Sebastian Schich
4. The Troubled Asset Relief Program: Has Forbearance as Far as the Eye Can See Saved the US Economy?
Gillian G.H. Garcia
5. Why is the Canadian Banking System so Remarkably Stable? A Comparative Analysis with the US
Jean Roy, Rima Turk-Ariss and Yenni Redjah
6. Systemic Contingent Claim Analysis – A Model Approach to Systemic Risk
Dale F. Gray and Andreas A. Jobst
7. Tax and the City: The UK’s Proposals for a Bank Levy
John Snape
PART II: SOVEREIGN DEBT
8. Iceland’s Financial Disaster and its Fiscal Impact
Arnór Sighvatsson and Gunnar Gunnarsson
9. The Greek Tragedy: Is There a Deus ex Machina?
Ioannis Kokkoris, Rodrigo Olivares-Caminal and Kiriakos Papadakis
10. Restructuring a Nation’s Debt
Lee C. Buchheit and Mitu Gulati
PART III: ADDRESSING THE PROBLEM OF ‘TOO-BIG-TO-FAIL’
11. Firm Stability and System Stability: The Regulatory Delusion
Geoffrey Wood with Ali Kabiri
12. ‘Living Wills’: Putting the Caboose Before the Engine and Designing a Better Engine
George G. Kaufman
13. Finding a Solution to the ‘Too-Big-To-Fail’ Problem
Arthur E. Wilmarth, Jr.
14. ‘Too-Big-To-Fail’ – Can Alternative Resolution Regimes Really Remedy Systemic Risk in Large Financial Institutions’ Insolvency?
Jens-Hinrich Binder
15. To Divest or Not to Divest: That is the Question...
Ioannis Kokkoris
PART IV: CROSS-BORDER ISSUES
16. Resolving Large Complex Financial Institutions Within and Across Jurisdictions
Robert R. Bliss and George G. Kaufman
17. From Consolidated Supervision to Consolidated Resolution
Rosa M. Lastra and Rodrigo Olivares-Caminal
18. Creating an EU-Level Supervisor for Cross-border Banking Groups: Issues Raised by the US Experience with Dual Banking
Larry D. Wall, María J. Nieto and David G. Mayes
PART V: PRUDENTIAL REGULATION
19. Capital and Liquidity Reform – A New Global Agenda
George A. Walker
20. Basel II to Basel III: A Great Leap Forward?
Imad Moosa
PART VI: COUNTRY CASE STUDIES
21. The US Architecture of Bank Regulation and Supervision: Recent Reforms in their Historical Context
Dalvinder Singh
22. An Evaluation of the Canadian Financial Safety Net During the Global Financial Crisis
John Raymond LaBrosse and James F. McCollum
23. Financial Safety Net Reform in Nigeria
Ganiyu Ogunleye
24. Islamic Deposit Insurance System: The Malaysian Model
Khairuddin Hj Arshad
25. Managing Financial Risk: The Precautionary Principle and Protecting the Public Interest in the UK
John F. McEldowney
Index
