Silicon Valley Bank: Interest Rate and Liquidity Risk within Asset Liability Management

Introduction Politicians and pundits have been casting blame and pointing fingers at a variety of sources that contributed to the collapse of Silicon Valley Bank (SVB), which also resulted in contagion at other financial institutions with similar balance sheet structures. Rather than point blame, it seems like a better idea to examine the way that […]

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ESG from the Issuer’s Perspective

Trends in Sustainable Security Issuance The number and total size of new issuance deals in the sustainable (or ESG, or Impact) security space has been consistently growing over the past decade around the globe. Even the COVID pandemic was not sufficient to diminish the need for new capital to fund projects and initiatives targeting environmental […]

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ESG from the Investor’s Perspective

What is ESG? The acronym “ESG” stands for environmental, social, and governance. More importantly, the term ESG has become synonymous with the concept of “sustainability.” In the capital markets, ESG criteria are a set of standards that should help to assess an organization’s operations evaluate potential investments in securities issued by those organizations. The universe […]

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Blueprint of various tools and gears

Federal Reserve Responses: Great Financial Crisis vs. Corona Crisis

As the Great Financial Crisis (GFC) of 2007-2008 began unfolding, the Federal Reserve initiated several programs intended to mitigate the economic deterioration that was originally rooted in a deterioration in the mortgage credit markets but which had rapidly expanded across the entire global economy. Many of the actions undertaken by the Fed were unprecedented and, […]

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Evolution of Responsible Investing

Investors have a long history of directing their capital towards organizations whose activities lead to desirable social outcomes. The earliest examples of this practice were often associated with specific religious or spiritual frameworks. For example, Shari’a investing principles dating to the first millennium are informed by specific Islamic values that forbid the consumption of pork […]

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Regulatory Update and 2019 Preview

There have been several significant regulatory changes to the financial services environment in 2018, and more are anticipated in 2019. Following is a brief summary of some of the most significant of those changes. Stress Testing Randal Quarles, Vice Chair for Supervision at the Fed, announced that changes to ease stress testing requirements would be […]

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The Long and Short of It: An Overview of STACR and CAS

Introduction to STACR and CAS Fannie Mae and Freddie Mac now have issued numerous credit risk transfer notes in this ever evolving market. This article summarizes some of the highlights of the issues/securities called Structured Agency Credit Risk or STACR, which are issued by Freddie Mac, and Connecticut Avenue Securities or CAS, which are issued by Fannie Mae. Origin […]

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Comparing and Contrasting CCAR and DFAST

Comparing and Contrasting CCAR and DFAST The Federal Reserve System’s (the Fed) regulatory responsibilities include the oversight of bank holding companies (BHCs), savings and loan holding companies, state member banks, and systemically important nonbank financial institutions (SIFIs). The Fed has reacted to some of the negative outcomes associated with the recent financial crisis by creating […]

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Collateralized Loan Obligations

Collateralized loan obligations (“CLOs”) are structured financial transactions where certain types of loans, usually highly leveraged syndicated commercial credits, are pooled together and transferred to a trust entity called a special purpose vehicle (“SPV”). The commercial credits are usually loans issued by financial institutions that are funding high-risk ventures such as leveraged buyouts. The SPV […]

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