We are in a time period of tremendous changes in our regulatory, competitive, legislative and economic environment. Regulatory initiatives must feel like a blizzard. In the past year there have been significant regulatory initiatives in interest rate risk and liquidity risk. Upcoming is financial reform which will alter how we interact with our customers, alter how we produce our income, and alter how much capital we will need to carry in order for regulators to consider us to be well capitalized. Continue reading
I think nearly everyone realizes that the industry has not effectively priced loans to cover credit risk. A long period of economic expansion along with the practice of basing reserves on fairly recent loss experience caused the industry to be under-reserved for the losses experienced since 2008. We are likely to see a regulatory agency initiated changes in reserve coverage requirements that force us to consider losses in both good and bad times in setting reserves for loan losses in the future. Continue reading
This week the NCUA, FDIC, Federal Reserve, OCC and OTS released the “Interagency Policy Statement on Funding and Liquidity Risk Management.” This is the final form (for now) of the “Proposed Interagency guidance on Liquidity and Funds Management” released for comments on July 6, 2009.
March 23, 2010 @ 2:00 Central is our FREE FARIN XSpeak Webinar titled : Five Steps to an Effective Liquidity Management Program. I plan limit my allocation of time spent on the “what to dos” to about 1/3 of the presentation. I’ll devote 1/3 to the Basel document as it defines many of the “hows” that are likely to be incorporated into the final “final” document. Then I’ll spend the last 1/3 of the session making recommendations on the approach you might take right now.
I hope to see you there! Continue reading
As you are probably aware, the Proposed Inter-agency Guidance on Liquidity and Funds Management was released on July 6. We’ve been told that the final version is likely to be released late first quarter or early second quarter 2010 with only minor changes. The guidance document raises the bar on liquidity risk measurement and management by a considerable amount. For the most part it tells you what to do, but not how to do it. Continue reading
A landing page is an entry point to a web site that draws in traffic from a search engine, convinces the visitor they want the product and then helps them to start the process to get it. To be effective, a landing page needs the following elements. . . Continue reading
In December of 2009, FARIN signed a contract with the American Bankers Association to redevelop the ABA Liquidity Toolbox which was last done in 2001. This series of books will incorporate the newest approaches and guidelines for measuring, managing and reporting liquidity within the banking industry. Continue reading
Yesterday (1/7/10) the FFIEC issued and advisory bulletin that indicates the increased expectations regulators have when reviewing the interest rate risk process. All federally insured institutions are being notified that the well managed designation will include more rigorous evaluation of risk, including value at risk, non-parallel rate movements, 2-3 year forecast horizons and more. Continue reading
Most readers of this blog are familiar with the fact I spend most of my time these days working with financial institutions on developing strategies to maintain and grow core funding. With the Proposed Interagency Guidance on Liquidity and Funds Management, the pressure to grow core funding is going to increase considerably in 2010. Continue reading
Yesterday I received the e-mail quoted further down this message from Kirby Davidson, President and CEO of the Graduate School of Banking at Wisconsin. The testimonial in the e-mail was from one of the students that attended Financial Managers School in September, 2009, about a month ago. Continue reading
For most of us, the greatest challenges we face in the current crisis are not behind us. They are in front of us, spread out over the next 3-5 years. You might ask, “How can you say this Farin, when some of the top economists in the country are saying the recession is over?” Continue reading
