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June 27, 2008

Proposed Basel Committee Liquidity Guidance Highlighted at DC Chapter Meeting

Yesterday the DC chapter of PRMIA held its first open forum, which was kindly hosted by the Office of Thrift Supervision in that agency's offices in downtown Washington. We'd like to thank Tim Ward, Tom Day and our other colleagues at the OTS for their hospitality. We'd also like to thank our colleagues from the CFA Institute who participated as well.

Tom Day's discussion of the proposed consultative paper on managing liquidity risk circulated for comment by the Basel working group points out that regulators are attempting to more precisely prescribe how liquidity is measured. He also noted that the comment period for this guidance closes in just one month. Click the link below to view Tom's presentation:

Government Regulation and the Impact on Liquidity Risk Practices

Tom's comments focused on the change in tone and increased specificity of the new Basel Committee guidance on liquidity risk. A number of attendees raised questions as to whether the proposed paper went far enough in terms of how liquidity issues are identified and managed.

One attendee, Alex Pollock of AEI, noted that some observers don't believe that talking about "liquidity" in the aggregate is even possible much less a useful way to expend limited management resources. Capitol Hill maven Robert Feinberg opined that the paper is too modest in its goals and runs the risk of reflecting badly on the working group because it remains far behind the curve in terms of the public debate regarding market structure and related symptoms of financial stress such as liquidity. Feinberg cited congressional testimony and the event last week at AEI, "How to Improve the Credit Rating Agency Sector," as indicators of where the public debate over market structure reform has advanced in the past few months.

The next meeting of PRMIA's DC chapter, Perspectives on Operational Risks to Global Financial Institutions, will be on September 22, 2008. The FDIC has very kindly given us access to the Seidman Center for the conference and Microsoft is sponsoring the event. If any members of the DC chapter work for organizations interested in sponsoring such events, please contact us:

Click the link below for details.

http://www.prmia.org/events/view_events.php?eventID=3059

Finally, our chairman and co-regional director Syed Ahmad and I wish to invite members of the DC chapter interested in participating in events planning or serving on the steering committee to contact either of us via the PRMIA mail system. Suggestions for speakers or sponsorship for the Op-Risk event are most welcome and needed immediately.

Chris Whalen
chris@ rcwhalen.com

Posted by whalenc at June 27, 2008 12:43 PM