Author Archives: Benjamin Wood

In Memoriam: CFA Institute Systemic Risk Council Mourns Passing of Founding Member William H. Donaldson, CFA

It is with enormous sadness that members of the CFA Institute Systemic Risk Council have learned that Bill Donaldson has passed away at age 93.

His contributions to the world of finance, education, and public service are an amazing testament to a life well lived. His many pursuits included service as the 27th Chairman of the Securities and Exchange Commission and Undersecretary of State under Secretary Henry Kissinger.  Bill also served as Chairman and CEO of the New York Stock Exchange and Chairman and CEO of Aetna Insurance Inc.

In 1959, Donaldson, along with Richard Jenrette and Dan Lufkin, founded Donaldson, Lufkin & Jenrette (DLJ). Its businesses included a range of investment, research, and brokerage services and grew quickly, becoming one of the top investment-banking firms globally. At its peak, DLJ employed over ten thousand professionals and was acquired by Credit Suisse for a reported $11.5 billion.

Bill was also generous in his service to many philanthropic, arts, and educational institutions, among them the Ford Foundation, CFA Institute, and Lincoln Center for Performing Arts.  Bill was perhaps most proud of his educational contributions as founding Dean of the Yale School of Management and service to his country as a First Lieutenant in the U.S. Marine Corps early in his career.

Even with these monumental demands, Bill continued to focus on life-long learning and mentoring others on market integrity and public service.  Among such activities, he partnered with Sheila Bair and Ira Millstein as a motivating force in the creation of the CFA Institute Systemic Risk Council.  His investment, regulatory, and securities exchange background was a key addition to our Council, which was created as a private-sector, non-partisan body of former government officials and financial and legal experts committed to addressing gaps in systemic regulation.   Many of these gaps were identified during the Great Financial Crisis and follow-on debates leading to enactment of the Dodd Frank Wall Street Reform Act.  Donaldson’s involvement brought weight and profile to this mission and to the commentary of the Council.

In a joint statement, Simon Johnson and Erkki Liikanen, Co-chairs of the SRC said,    “Few people have made such an enduring contribution to the evolving landscape of markets, based on firm advocacy for regulation that advances market integrity, safety, and soundness.  Bill was one-of-a-kind in his sweeping career, and it was a great privilege to serve with him on the Council.”

Sheila Bair, Founding Chair and Senior Advisor to SRC, added  “I knew and worked with Bill when he chaired the NYSE and the SEC.  He exhibited excellence and integrity in both private and public service. To have Bill’s wisdom and backing in the creation of the Systemic Risk Council was a blessing. If more financial regulators and Wall Street executives had followed his good example, we never would have had the Great Financial Crisis.”

All of us at the Council and CFA Institute offer our deepest condolences to Bill’s family.

CFA Institute Systemic Risk Council Publishes Spring 2024 Newsletter

For further information contact Kurt Schacht at Kurt.Schacht@cfainstitute.org.

WASHINGTON, D.C.— May 1, 2024

The CFA Institute Systemic Risk Council has released its Spring 2024 Newsletter.

Each quarter, we will recap the activities of the CFA Institute Systemic Risk Council (SRC or the Council) and highlight the key systemic debates and challenges affecting global markets and regulators. In addition, this issue notes the passing of Ira Millstein, a dear friend, mentor, and one of the founders of the Council. Other areas of focus include:

  • Revitalizing the Fed Discount Window
  • Understanding the Impacts of the Russia-Ukraine War
  • Navigating EU Financial Challenges

LINK: http://www.systemicriskcouncil.org/wp-content/uploads/2024/05/Quarterly-Systemic-Risk-Report-Spring-2024.pdf

In Memoriam: CFA Institute Systemic Risk Council Mourns Passing of Founding Member and Legal Advisor, Ira Millstein

It is with enormous sadness that members of the CFA Institute Systemic Risk Council have learned that Ira Millstein has passed away. Ira was 97 years old.

Ira’s contributions to public life, for the US and the world, are beyond measure.  Among his many efforts, Ira was a motivating force in the creation of the CFA Institute Systemic Risk Council (Council or SRC), where he served as member and Chief Legal Adviser for over ten years.   Ira helped conceptualize our Council as a private sector, non-partisan body of former government officials and financial and legal experts committed to addressing regulatory and structural issues relating to global systemic risk, with a particular focus on the United States and Europe. It was formed with the vision to provide a strong, independent voice for reforms that are necessary to protect the public from financial instability. The original mission continues – to help ensure a financial system in which markets and  citizens have confidence.  Ira’s involvement brought weight and profile to this mission and to the commentary of the Council.

In a joint statement, Simon Johnson and Erkki Liikanen, co-chairs of the SRC said, “Ira was a leader in so many areas of law, corporate governance, and public service that to serve with him on the Council has been a great privilege. To have his active help and backing in the creation of this organization has been a blessing. He represented everything the SRC stands for and exists to promote. Our deepest condolences to Ira’s family.”

Sheila Bair, founding chair of the SRC, added,  “Given Ira’s long and distinguished legal and civic career which covered many illustrious causes and organizations, he hardly needed to lend his reputation and good counsel to the SRC at our formation.   Ira did so to help us become a recognized and credible voice for financial stability. Notably, his strong encouragement and counsel for regulatory transparency, independence, and ethics in public service continue to resonate.  We would all do well to remember and live such advice.”

CFA Institute Systemic Risk Council Publishes 2023 Annual Report

For further information contact Kurt Schacht at Kurt.schacht@cfainstitute.org.

WASHINGTON, D.C. — February 22, 2024

The CFA Institute Systemic Risk Council today released its 2023 Annual Report.

Marking its 10-year anniversary, the CFA Institute Systemic Risk Council releases this annual report recapping its activities and highlights of key systemic debates and challenges affecting global markets and regulators in 2023. This past year included several major regulatory initiatives to improve bank resilience.  We also experienced several US regional bank failures, once again requiring authorities to invoke emergency measures to stem contagion across the broader financial system. Notably, this was the first time we have witnessed the full speed of runs that can be generated by social media and financial market apps. Meanwhile, banking systems also faced particular challenges in Switzerland and in the UK. This annual report recaps a fascinating year in the realm of economics: despite elevated recession risks, increased geopolitical stress, and a flash banking crisis, the case for a miracle soft landing remains.

Topics covered in this annual report include:

  • Completing the Work of Basel III
  • FSOC’s NBFI Proposals
  • Enhancements to SEC’s Covered Clearing Agency’s Resiliency Plans
  • Long Term Debt Standards
  • Lessons Learned from 2023 US Bank Failures

LINK: http://www.systemicriskcouncil.org/wp-content/uploads/2024/02/SRC-2023-Annual-Report.pdf

CFA Institute Systemic Risk Council Writes in Support of Agencies’ Efforts to Implement the Basel III International Standards for Large Banks

CFA Institute Systemic Risk Council (the Council) recently provided detailed comments on the Basel III proposals from the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.  The Council provides analysis of the so-called endgame to ensure proper framing of capital adequacy, the relationship between capital and lending and why capital improvements since the Global Financial Crisis continue to fall short.  The Council offers its support to the agencies’ efforts to implement the Basel III international standards for large banks because; (i) they are an important step in ensuring that large banking organizations are appropriately capitalized, (ii) they improve GFC era reforms and reduce the probability of global financial contagion, (iii) they bolster the ability of our system to withstand severe economic downturns without the need to resort to the use of taxpayer dollars or extraordinary support measures.

Letter PDF

CFA Institute Systemic Risk Council Publishes Fall 2023 Newsletter

For further information contact Kurt Schacht at Kurt.Schacht@cfainstitute.org

WASHINGTON, D.C.— December 18, 2023

The CFA Institute Systemic Risk Council has released its Fall 2023 Newsletter.

Each quarter, we will recap the activities of the CFA Institute Systemic Risk Council (SRC or the Council) and highlight the key systemic debates and challenges affecting global markets and regulators. This third issue of the year comes after a year of significant events in the world of global finance and markets. Areas of focus in this quarter’s newsletter include:

  • Basel III Proposals’ Path Ahead
  • Supporting Long-Term Debt Standards
  • Challenges, Risks, and Resilience in the EU Banking Sector
  • Risk Management and Regulatory Priorities from the SEC

LINK: http://www.systemicriskcouncil.org/wp-content/uploads/2023/12/Quarterly-Systemic-Risk-Report-Fall-2023.pdf

CFA Institute Systemic Risk Council Writes in Support of Proposed Rules on Long-term Debt Requirements

On December 10, 2023, the Systemic Risk Council (the Council) offered its response to proposed rules of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation that would require certain large depository institution holding companies, U.S. intermediate holding companies of foreign banking organizations, and certain insured depository institutions, to issue and maintain outstanding a minimum amount of long-term debt. The proposed rule would improve the resolvability of these banking organizations in case of failure, may reduce costs to the Deposit Insurance Fund, and mitigate financial stability and contagion risks by reducing the risk of loss to uninsured depositors. The Council supports the agencies’ proposed requirement that large regional banks must hold a minimum level of long-term debt to aid in their resolvability in the case of failure. The Council additionally supports other elements of this multi-agency rulemaking as agencies seek to improve the resolvability of these banking organizations in case of failure, reduce costs to the Deposit Insurance Fund, and decrease the probability that extraordinary support measures may be needed in the future by reducing financial stability and contagion risks associated with the risk of loss to uninsured depositors.

 

Letter PDF

CFA Institute Systemic Risk Council Adds New Members

Washington, D.C. – October 4, 2023

CFA Institute Systemic Risk Council (SRC) today announced that it has added three new members to the Council.  They are  Dr. Elke König of Germany, René Karsenti of France and Christina Romer from the United States.

Erkki Liikanen, Co-Chair of the Council said, “We are thrilled to add these three very talented and experienced people to the Systemic Risk Council, broadening our European representation and adding further international perspective to our Council discussions.”

Dr. Elke König is a German MBA in business and former auditor. From January 2012 until 2015, she was president of the Federal  Financial Supervisory Authority (BaFin). In December 2014, she became the first Chair of the newly established Single Resolution Board (SRB) of the Single Resolution Mechanism, headquartered in Brussels. She served as Chair of the SRB until January 2023, when her second term expired.  After qualifying in business administration and obtaining a doctorate, she spent many years working for companies in the financial and insurance sector including KPMG Deutsche Treuhandgesellschaft in Cologne, Munich Re Group (Head of Accounting),and ; Hannover Rückversicherung AG as Chief Financial Officer.   From 2010 to the end of 2011, Dr König was a member of the International Accounting Standards Board (IASB) in London.

René Karsenti is Senior Advisor to the International Capital Market Association (ICMA), having previously served as President. From 1995 until joining ICMA in 2006, Mr. Karsenti was Director General of Finance at the European Investment Bank (EIB) in Luxembourg, having previously served as Treasurer of the European Bank for Reconstruction and Development (EBRD) in London from its inception in May 1991 to 1995. Prior to joining EBRD, from 1979 Mr. Karsenti held a variety of senior positions in the treasury organisations of the World Bank Group (IBRD & IFC), including as IFC Treasurer.

Christina Romer is Professor of the Graduate School at the University of California, Berkeley, and a research associate of the National Bureau of Economic Research (NBER).  She is a specialist in economic history and macroeconomics and is best known for her work on the causes of the Great Depression, the conduct and effects of macroeconomic policy, and the impact of financial crises. Professor Romer served as chair of the Council of Economic Advisers from January 2009 to September 2010. Professor Romer graduated from the College of William & Mary and received her Ph.D. from the Massachusetts Institute of Technology.

Welcoming the appointments, SRC Co-Chair Simon Johnson added, “We are delighted these distinguished experts will be joining our systemic risk discussions. They bring a wealth experience and diverse perspectives to this important work.”  The appointments are effective immediately and bring the Council to a total of nineteen members.  The Council is committed to engaging with U.S., European, and other global policy makers at the highest levels in order to preserve a stable financial system. For the full bios of members and more on the SRC please go to www.systemicriskcouncil.org.

CFA Institute Systemic Risk Council Publishes Summer 2023 Newsletter

For further information contact Kurt Schacht at Kurt.Schacht@cfainstitute.org

WASHINGTON, D.C.— September 5, 2023 The CFA Institute Systemic Risk Council has released its Summer 2023 Newsletter.

Each quarter, we will recap the activities of the CFA Institute Systemic Risk Council (SRC or the Council) and highlight the key systemic debates and challenges affecting global markets and regulators. This second issue of the year comes amidst many hot spots and concerning issues around the globe that continue to post potential systemic vulnerabilities. These areas of focus include:

  • Nonbank financial institutions
  • Escalation in the Russian war on Ukraine
  • Lag effects of unprecedented rate hikes in the ongoing response to inflation
  • Refining bank capital ratios and other resilience measures
  • Climate change’s effects on the global financial system
  • Chinese economy shocks

LINK: http://www.systemicriskcouncil.org/wp-content/uploads/2023/09/Quarterly-Systemic-Report_Summer-2023.pdf

CFA Institute Systemic Risk Council Writes in Support of the US SEC Proposed Covered Clearing Agency Resilience and Recovery and Wind-Down Plans

On August 30, 2023, the Systemic Risk Council (the Council) offered its response to the U.S. Securities and Exchange Commission’s proposed Covered Clearing Agency (CCA) Resilience and Recovery and Wind-Down Plans’ proposal to improve CCAs’ ability to manage stressed markets through monitoring and margining practices. The Council strongly supports the Proposals as far as they go. The Council believes they contain incentives that should encourage CCAs to take steps that will prevent their becoming “systemic-risk transmitters and amplifiers.” At the same time, the Council believes the Proposals can be enhanced by considering a number of essential elements that would significantly augment resilience against a CCA’s failure, preventing almost certain systemic shockwaves that could undermine the stability of the financial system.

 

Letter PDF