Economic capital estimation for consumer portfolios Fang Du This article has six sections: 1) an introduction to the general practice related to economic capital; 2) regulatory capital and its differences to economic capital; 3) the methodology of estimating the credit risk for consumer portfolios; 4) research results on estimation of default variance-covariance; 5) a focus […]
Category: RMA Journal, The
Fx currency transactions: hidden costs Carlos A. DaCunha This article presents the case for adjusting an importer’s acquisition cost of inventory for the amount of gains or losses derived from foreign exchange currency transaction exposure. The unprecedented growth of multinational business activity in the past decade has led to an increasing number of small American […]
Different strategies dictated for different lenders: relationship lending has its own risks Phillip J. Britt More than one strategy can lead to successful business-loan portfolios, lenders of several institutions and a banking regulator told attendees at the Federal Reserve Bank of Chicago’s 41st Annual Bank Structure and Competition Conference. Among the panelists represented in this […]
The loan committee: up close & personal Beverly J. Foster Entrepreneurs recognize them as a necessary evil, while banks may succeed or fail by their decisions. The need for fast, efficient response while retaining sound judgment has led many banks to employ automation, move to a signature system, and in other ways transform the traditional […]
Tales of whoa! On the docket: property deposited in escrow before bankruptcy isn’t part of the debtor’s bankruptcy estate if redemption rights expire before bankruptcy Michael L. Weissman In In re NTA, LLC v. Concourse Holding Company, LLC, 380 F.3d 523 (1st Cir. 2004), the issue was whether LLC membership interests that had been placed […]
So close, and yet so far effective risk management Karen Van de Castle This article outlines findings from Standard & Poor’s Risk Solutions first annual benchmarking of banks’ risk management practices. Participating banks, which range in size from less than $20 billion in assets to more than $300 billion, indicated three major areas of concern: […]
10 Points to Consider in Reducing Consolidation Risks David A. Sherman Those in the field know. An examiner with the Operational Risk Team at the Chicago Fed has identified 10 management practices that have proven to mitigate the risks inherent in consolidations. Although bank consolidations generally involve conversions and reorganizations, this article focuses on consolidations/mergers. […]
Evolving regulationfrom the Bank Secrecy Act through the USA Patriot Act: who are your customers, what are they doing, and why should you care? Michael I. Frachioni The din of publicity and commentary surrounding the Patriot Act over the past three years should not cause one to lose sight of the fact that this three-year-old […]
Placing credit portfolio management within the organizational structure William Ingrassia The credit portfolio management function within many financial institutions has evolved significantly as risk mitigation and distribution mechanisms have developed. Questions arise about whether it’s better to have the credit portfolio management function inside or outside the originations process, on the private or public side […]
True confessions: one banker’s inner struggle with cash flow Thomas P. Olson Many, many years ago, during my first training days in banking, I was asked what would best indicate a company’s ability to repay a loan. Not knowing too much about financial analysis–or anything else, for that matter–I said hopefully, “Well, I guess if […]