Conflict of Rating Agencies & Regulation; Q: Nobel
Laureate
London, UK - 27 August 2007, 09:54 GMT
Dear ATCA Colleagues
[Please note that the views presented by individual contributors
are not necessarily representative of the views of ATCA, which is neutral.
ATCA conducts collective Socratic dialogue on global opportunities and threats.]
We are grateful to:
* Prof Charles Calomiris, Columbia Business School, New York & Prof Joseph
Mason, LeBow College of Business, Drexel University, Philadelphia, USA for
"The Conflict of Rating Agencies and Regulation - We need a Better
Way to Judge Risk" in response to the ATCA QUERY: Role of Credit Rating
Agencies;
. Dr George Feiger, President & CEO, Contango Capital Advisors, based
in Berkeley, California, USA for, "Questioning the Views of a Nobel Laureate"
in response to Prof Joseph Stiglitz's submission to ATCA, "Day of
Reckoning for Americans who lived Beyond their Means."
Dear DK and Colleagues
Re: The Conflict of Rating Agencies and Regulation - We need a Better Way
to Judge Risk
Recent downgrades on Residential Mortgage-Backed Securities (RMBS) and Collateralised
Debt Obligations (CDO), and subsequent hedge fund failures and market turmoil,
have led many to blame ratings agencies for the mortgage mess. Both the European
Commission and Barney Frank, Chairman of the House financial services committee
in the US, promise hearings into the culpability of ratings agencies.
[CONTINUES]
[ATCA Membership]
Best
Charles Calomiris & Joseph Mason
Prof Charles Calomiris is the Henry Kaufman Professor of Financial Institutions
at the Columbia University Graduate School of Business and a Professor at
Columbia's School of International and Public Affairs. He is one of America's
leading authorities on financial institutions. His research spans the areas
of banking, corporate finance, financial history and monetary economics. He
has advised numerous firms, agencies and governments on the performance and
regulation of financial institutions. He co-directs the Project on Financial
De/Regulation at the American Enterprise Institute (AEI) and is the Arthur
Burns Scholar in International Economics at AEI. He is a member of the Shadow
Financial Regulatory Committee, a Research Associate of the National Bureau
of Economic Research, and was a Senior Fellow at the Council on Foreign Relations.
He teaches international banking and a case course on business and finance
in emerging market economies. He is Chairman of the Board of Greater Atlantic
Financial Corporation, a publicly traded bank based in the Washington, DC,
metropolitan area, and a Managing Partner of Gauss Fund, LP. He served on
the International Financial Institution Advisory Commission, a Congressional
commission to advise the US government on the reform of the IMF, the World
Bank, the regional development banks, and the WTO. His research spans several
areas, including banking, corporate finance, financial history, and monetary
economics.
Prof Calomiris is the recipient of research grants or awards from the National
Science Foundation, the World Bank, the Japanese Government, the Herbert V
Prochnow Foundation, and the Garn Institute of Finance. In 1995, he was named
a University Scholar at the University of Illinois, where he served as Associate
Professor of Finance and Co-Director of the Office for Banking Research. He
is a member of the editorial boards of the Journal of Banking and Finance,
the Journal of Financial Services Research, the Journal of Financial Intermediation,
the Journal of Economic History, the Journal of Economics and Business, and
Explorations in Economic History. He serves or has served as a consultant
or visiting scholar for the Federal Reserve Banks of New York, Chicago, Cleveland,
and St. Louis, the Federal Reserve Board, the World Bank, and the governments
of Mexico, Argentina, Japan, China, El Salvador, Connecticut and Massachusetts.
His private sector clients have included Bank of America, Citicorp, Fenwick
& West, Fleet, LeBoeuf Lamb, The Limited, Lloyds, Mayer Brown, Milbank
Tweed, UBS Securities, US Trust Corporation, and Wachtel Lipton. He also teaches
international banking and advanced corporate finance at the MBA and PhD levels
at Columbia, as well as the MBA core course in Business Values and Ethics.
He teaches PhD-level courses at the World Bank and the IMF, including a course
at the IMF on Emerging Financial Markets for the past three years. He earned
a PhD in economics from Stanford University and a BA in economics, magna cum
laude, from Yale University.
Prof Mason is an Associate Professor of Finance at Drexel University's LeBow
College of Business, a Fellow at the Wharton School, and a Visiting Scholar
at the Federal Deposit Insurance Corporation. Professor Mason teaches in the
areas of corporate finance, financial markets and institutions, and risk management
and derivatives. He teaches the writing intensive course in Money and Banking
and is a founding member of Drexel's Writing Intensive Curriculum Implementation
Group. Prior to joining Drexel University, he was a financial economist with
the Office of the Comptroller of the Currency and Adjunct Assistant Professor
of Finance at Georgetown University School of Business. His research spans
the fields of corporate finance, financial intermediation, financial history,
and monetary economics, focusing on issues related to both theory and public
policy. He is the recipient of research grants or awards from the National
Science Foundation, the Federal Reserve Bank of St Louis, Drexel University,
and the University of Illinois. He serves or has served as advisor and consultant
to many agencies and firms, including the Federal Deposit Insurance Corporation,
the Federal Reserve Bank of Philadelphia, The Conference Board, the G-30,
the World Bank Group, and numerous private firms. He is a member of the American
Finance Association, the Financial Management Association, the Cliometrics
Society, the Economic History Association, Beta Gamma Sigma, and Omicron Delta
Epsilon.
Prof Mason has published academic articles in the American Economic Review;
Journal of Business; Journal of Money, Credit, and Banking; Journal of Banking
and Finance; Pacific-Basin Finance Journal; Journal of Financial Services
Research; Research in Banking and Finance; and Explorations in Economic History,
and book chapters in Resolution of Financial Distress (World Bank Group, Stijn
Claessens, et al, eds); Privatization, Corporate Governance and Transition
Economies in East Asia (NBER, Takatoshi Ito and Anne Krueger, eds); and Too-Big-To
Fail: Policies and Practices in Government Bailouts (Greenwood Publishing,
Benton E Gup ed). Dr Mason's current research projects include investigating
the micro and macroeconomic effects of bankruptcy and liquidation procedures;
the incidence and cost of systemic risk; and the management of idiosyncratic
risks posed by new forms of bank lending, asset-backed securities, collateralized
debt obligations (CDOs) and securitization. His work has been cited or published
in the New York Times, Washington Times, the Economist, Wall Street Journal,
Associated Press, Reuters, Bloomberg, KnightRidder Syndicate, MarketWatch-Dow
Jones Newswire, MIST News, Financial Times, Barrons, Business Week, die Zeit,
Investment Dealers Digest, American Banker, BNA's Banking News, Realty Times,
Toronto Globe & Mail, the Philadelphia Business Review, and on CNBC, NBC
Nightly News. He has made numerous live appearances on CNBC, Bloomberg Television,
Comcast CN8 News, WBBM Radio Chicago, WHYY Public Radio Philadelphia, and
WWDB Talk Radio Philadelphia.
____________________________________________________________________________
Dear DK and Colleagues
Re: Questioning the Views of a Nobel Laureate
I am astonished to be writing to contradict the views of so distinguished
an economist as Prof Joseph Stiglitz.
[CONTINUES]
[ATCA Membership]
Regards
George Feiger
Dr George Feiger is President and CEO of Contango Capital Advisors, based
in Berkeley, California. He brings to the firm a diverse background in the
banking, financial services and wealth-management industries. He is also Executive
Vice President of the firm's parent company, Zions Bancorporation listed on
Nasdaq and based in Salt Lake City, Utah. Prior to Contango, Dr Feiger served
in a number of senior positions in the financial services sector. He was a
Senior Advisor to the Monitor Group, Global Head of Onshore Private Banking
for UBS, Global Head of Investment Banking at SBC Warburg and was a Senior
Partner at McKinsey & Co during his time in Europe. He led the merger
integration of the corporate finance businesses of Swiss Bank Corp and SG
Warburg, and oversaw the consolidation of SBC Warburg's sales and trading
businesses. He was also a partner at Capco, a financial services consulting
firm. He holds a PhD in Economics from Harvard University and was an Associate
Professor of Finance at Stanford University's Graduate School of Business.
He has served as a director on several corporate boards and is a frequent
writer and speaker on a wide range of financial topics.
[ENDS]
We are grateful to:
* Prof Charles Calomiris, Columbia Business School, New York & Prof
Joseph Mason, LeBow College of Business, Drexel University, Philadelphia,
USA for "The Conflict of Rating Agencies and Regulation - We need
a Better Way to Judge Risk;"
. Dr George Feiger, President & CEO, Contango Capital Advisors, based
in Berkeley, California, USA for, "Questioning the Views of a Nobel
Laureate;"
. Prof Joseph Stiglitz, Nobel Laureate in Economics (2001), Columbia University,
New York, USA , for "Day of Reckoning for Americans
who lived Beyond their Means;"
. Dr George Feiger, President & CEO, Contango Capital Advisors, based
in Berkeley, California, USA for "Suggestions
for Resolving Sub-Prime Dilemma Step by Step;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA
for "Understanding Rating Agencies beyond
the Sub-Prime Meltdown;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London,
UK, for "Asymmetric Knowledge Risk and Market
Deadlock;"
* Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "High
Credit Ratings and Breakdown of Trust;"
* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based
in London and Tunbridge Wells, UK, for "Role
of Auditors;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London,
UK, for "ATCA QUERY: Role of Credit Rating
Agencies;"
. Peter Tasker, Founding Partner, Arcus Investment, based in Tokyo, Japan,
for "Resilience of Corporate Profits &
Sub-Prime Fiasco -- Global View from Japan;"
. Daniel Morler, Head of Middle East, LGT Private Bank, based in Vaduz,
Liechtenstein, for "Human Factor, Information
Lag, Geo-Politics and Central Banks;"
. Justin Urquhart Stewart, Director, Seven Investment Management, London,
UK, for "Pride Before the Fall -- Those Who Don't Know that they
Don't Know;"
. Martin Wolf, Associate Editor & Chief Economics Commentator, Financial
Times, London, UK, for "To Cut or Not to
Cut: Federal Reserve must Prolong the Party;"
. The Hon Al McDonald, Chairman and CEO, Avenir Group, from Michigan, USA,
for "Balancing The Role of Management in Extreme
Financial Turbulence."
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Subprime
Crisis Spreads Across Regions and Financial Sectors;"
* Hervé de Carmoy, European Vice-Chairman, Trilateral Commission,
based in Paris, France, for "Role of Large
Financial Institutions in Fuelling Crisis;"
* Dr Jim Walker, Chief Economist, CLSA, based in Hong Kong for "China
Chaos and Subprime Butterfly;"
. Ashutosh Sheshabalaya, CEO, India-Advisory, based in Brussels, EU, and
Bassilly, Belgium, for "India turns History
Upside Down;"
. John Elkington, Chief Entrepreneur, SustainAbility, based in London, UK,
and returning from India, for "Mother Convulsion
- India's Third Liberation;"
. Stephen Lendman, based in Chicago, Illinois, USA, for "Slow
Motion Train Wreck" via Ashok Khosla, Chairman, Development
Alternatives, New Delhi, India;
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Market
Convulsions;"
. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA
for "Federal Reserve's Changed Focus;"
. Bill Emmott, Director, UK-Japan 21st Century Group, based in London and
Somerset, UK, for "Japan's Strong Yen;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA
for "The Asymmetric Loss of Trust and Chain
Reaction;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Public
Inquisition of Credit Rating Agencies may Accelerate Downturn;"
. Dr George Feiger, President and CEO, Contango Capital Advisors, based
in Berkeley, California, USA, for "Watch
out for Dramatic Winners;"
* The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Systemic
Risk & Sectoral Meltdown: Heightened Correlation and Deleveraging;"
. Rudi Bogni, Chairman, Medinvest, and Director, Old Mutual, from Basel,
Switzerland, for, "Non-Stop Central Banks'
Intervention;"
. Dr Ravi Batra, Professor of Economics, Southern Methodist University,
Dallas, Texas, USA, for, "Towards a Global
Economic Crisis?;"
. Aurora Carlson, Founder, Open One Center, based on the West Coast, Sweden,
for "The Coming Storm of Change;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Large
Quake hits Quants as Computer-Driven Quantitative Hedge Funds Short-Circuit;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA
for "Prolonged Credit Market Correction Ahead;"
. Prof Dr Norbert Walter, Chief Economist, Deutsche Bank Group, based in
Frankfurt, Germany, for "Economic Consequences
of The Sub-Prime Crisis;"
. Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "Regulators,
Hedge Fund Lending and Cross-Selling;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Perfect
Storm: Credit Freeze and Distress Selling by Hedge Funds;"
. Dr George Feiger, based in Berkeley, California, USA, for "Two
Faces of the Same Coin;"
* The ATCA Editorial Team, based in Canary Wharf, London, for "Contagion
and Systemic Risk? ECB Injects Record Euro 95bn post Major Disturbance;"
. The ATCA Editorial Team, for "Flight to Quality
as Markets finally Appreciate Risk;"
. Robert McNally, Chairman, London Chamber of Commerce Property and Construction
Group, for "Erosion of Commercial Real Estate
as a Solid Asset Class;"
. Alexander Hoare, CEO, C Hoare and Co, Private Bankers, based in the City
of London, for "Destructive
Creativity, Leverage and The Derivatives Market;" and
. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, for
"The Fear of Central Bankers -- Flight from
Illiquidity, Derivatives and Heightened Risk of Contagion;"
in response to, "Are the Currency Markets Warning
that there is Trouble Ahead? The Precipitous Decline of the US Dollar and
its Impact on the World."
* Denotes ATCA QUERY: Role of Credit Rating Agencies
We look forward to your further thoughts, observations and views. Thank
you.
Best wishes
For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency
Alliance (ATCA)
ATCA: The Asymmetric Threats Contingency
Alliance is a philanthropic expert initiative founded in 2001
to resolve complex global challenges through collective Socratic
dialogue and joint executive action to build a wisdom based global
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as well as 250 Editors-in-Chief of major media.
The views presented by individual contributors are not necessarily
representative of the views of ATCA, which is neutral. Please
do not forward or use the material circulated without permission
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