Fed Tabs Smith School's Rossi for Insight to
'Urgent Financial Policy Issues'
Cliff Rossi, Tyser Teaching Fellow and Executive-in-Residence at the
University of Maryland's Robert H. Smith School of Business, is among about 25
finance experts from around the world selected to share ideas in an April 9-10,
2012, conference, "Financial
Reform: the Devil is in the Details," hosted by the Federal Reserve in
Atlanta.
Rossi is on a panel to discuss the role of regulated intermediaries in
providing maturity transformation. Other panels/presentations will cover the
future role of the government in mortgage finance, the potential for the new
regulations to create a new shadow banking system and the creation of
systemically responsible money market funds.
In describing significance of its event, the Federal Reserve stated: "A set
of urgent financial policy issues, such as sovereign risk and over-the-counter
derivatives, has relegated a host of other major policy issues to the level of
mere “details” that can be more thoroughly addressed later. Yet the ultimate
resolution of these details may be profoundly influenced by decisions being made
now."
The title of Rossi's panel discussion poses the question "Is Maturity
Transformation the Devil's Work?" The panel will review the dilemma faced by
banks in attempting to address requirements seemingly at odds with one another.
“The topic covers tradeoffs in two critical aspects of bank asset-liability
management: ensuring sufficient liquidity exists at financial institutions to
avoid bank panics as during the financial crisis, and matching the duration of
assets and liabilities of these firms to manage interest rate risk,” Rossi said.
“A number of recent regulatory reforms are aimed at shortening the length of
bank funding types in order to ensure sufficient liquidity during a crisis. At
the same time, prudent risk management practices require these firms to lengthen
their liabilities to better match their asset maturities.”
Other financial experts speaking at the conference include Federal Reserve
Chairman Ben Bernanke, Sheila Bair from Pew Charitable Trusts, Paul McCulley
from the Global Interdependence Center and notables from the Federal Deposit
Insurance Corporation, Bank of England and others.
In early December, Rossi and Smith colleague Dilip B. Madan, professor of
finance, were among experts selected by U.S. Treasury officials to speak at a
conference on financial reform.
Rossi coauthored a working paper from the event.
