Engaging a global conversation on financial policy

Smith School faculty have been actively involved in advising key players and proposing potential solutions to the finance crisis, briefing congressional staffers, members of the House and Senate Committee on Banking and the Committee on Government Oversight, and the federal Oversight and Government Reform Committee on issues from the collapse of Bear Stearns to the Troubled Asset Relief Program (TARP).

Now the Smith School has drawn together the expertise of Smith faculty in its new Center for Financial Policy. “The financial crisis highlighted the need for a broader, interdisciplinary perspective to addressing financial policy and corporate governance issues,” says Lemma Senbet, William E. Mayer Chair Professor of Finance and director of the center. “Our hope is for government financial regulatory agencies, congressional staffers, industry associations, and corporations to look to the center as a partner and champion of best practices in the financial arena.”

The center will encompass the broad range of research in which Smith faculty are already world experts, focusing on areas related to corporate governance, led by Senbet; financial institutions and corporate finance led by Haluk Unal, professor of finance; emerging capital markets, led by Vojislav Maksimovic, Dean’s Chair Professor of Finance; asset valuation and markets, led by Albert “Pete” Kyle, Smith Chair Professor of Finance; money management, led by Russ Wermers, associate professor of finance; and risk management, led by Alexander Triantis, professor of finance and finance department chair, and Cliff Rossi, the center’s managing director.

As the federal government continues its efforts to reform and regulate the financial services industry, policy-makers will need the expertise born of long study that only comes from academia. The center will marshal and mobilize Smith faculty in order to clarify the issues and questions that perplex policy-makers in the complex world of financial markets. The center leaders will reach out to Capitol Hill staffers in order to help steer and influence policy and elevate the center’s visibility as a source of thought leadership and relevant, timely scholarship. “We’d like to build relationships with agencies within the administration and Congress that have engaged in policy work related to financial services,” says Rossi.

In September, Senbet spoke to a group of interested executives and policy-makers about executive compensation and public policy at the Smith School’s Thought Leadership speaker series in Washington, D.C. In October, the center brought in prominent economist Henry Kaufman to speak.

On November 5, the center will bring together academia, policy and practice at a roundtable event titled: “Executive Compensation—Practices and Reform,” featuring keynote speaker Kenneth Feinberg, a well-known lawyer and mediator recently appointed to be the Obama administration’s special master for compensation. In this role he will be responsible for setting the salaries of some of the top financiers and industrialists in America, including the top 25 executives of AIG, General Motors, Chrysler, Citibank and Bank of America.

The center will also offer white papers and periodic briefings.

Bringing together stakeholders from academia, industry and the policy world is one of the center’s key goals. Over the years Smith’s finance department faculty have forged relationships with executive leadership at the World Bank, the International Monetary Fund (IMF), Fannie Mae and Freddie Mac, staff with Congress and the Obama administration, and insurance and trade organizations. The center is also drawing on the extensive industry experience and connections of Smith alumni.

One such alumnus is William Longbrake, PhD ’72, who joined the center as an Executive-in-Residence. Longbrake has extensive experience in finance, macroeconomics and monetary policy, risk management, housing, public policy and academia, government, serving both the public and private sectors. He is chairman emeritus of the Financial Services Roundtable’s Housing Policy Council. He served as chief financial officer of Washington Mutual Inc. for most of the period from 1982 to 2002, except for 1995-1996 when he was chief financial officer of the FDIC. He serves on several committees of the American Bankers Association, as well as numerous boards of directors of financial institutions and charitable foundations.
Rossi, the center’s managing director, has nearly 25 years experience in banking and government, having held senior executive roles in risk management at several of the largest financial services companies. His most recent position was Chief Risk Officer for Consumer Lending at Citigroup where he was intimately involved in TARP funding and stress tests performed on Citi. Previous to Citi, Rossi held senior positions at other major financial institutions and worked for a number of years at the Treasury Department and Office of Thrift Supervision working on key policy issues affecting depositories.

Senbet, the center director, is a world-renowned and widely-published researcher in the field of finance. He has advised the World Bank, the IMF, the UN, and other institutions on issues of financial sector reforms and capital market development. He has served as an independent director for The Fortis Funds and currently is an independent director for The Hartford Funds.