Moderators
- Michael Hutchison, UC Santa Cruz
- Darrell Duffie, Stanford University
- Barry Eichengreen, UC Berkeley
- Mark Levonian, Promontory Financial Group
next sources of financial risks
- highlights
China’s corporate debt build up
- FinTech disintermediating traditional bankers and removing central bank fiscal levers
- cyber disintermediation
hackers screwing around with bank account records
- corporate borrowers went away back in 2008. Banks forced to find riskier customers
- new technologies are taking away a lot of the lending business
- new technology
new payment systems
- digital currencies - Singapore, Canada and China
- cloud provider concentration - Fintech everything on cloud
- US regulation backsliding risk
management of federal government
- stress test rules
- reduction of 100-200 billion capital in US
capital and liquidity
- liquidity was the main trigger of the melt down
- Dodd Frank bill
- sovereign funds risk: Turkey is 3-4X of Greece economy
- china corporate debt risk as its financial system becomes more integrated with the rest of the world
check for excessive short term borrowing
- plenty of shadow banking in China growing rampantly
- institutional funds risk
banking system is still concentrated in top 5
- US absorbed 85% of low cost homes through Fanny Mae mortgages
quicken is the largest mortgage generator
- largest banks in the world are all mainly Chinese versus Japanese back 10 years ago
- 2008 melt down
caused by incompetent regulation rather than wrongful act of financial people.
Prosecution is setup to go after cases they would likely win
- complexity of financial system
- complexity of corporate structure
- complexity versus usefulness of market actual needs
- populist risk: under funded pension fund. Because of really low risk rates
- financial consumers
not a priority versus banks
- Dodd Frank act
- consumer financial protection bureau
- growth rate of structured notes?
- trade war
economic consequences was very limited
- Brexit effect took 4 quarters to show up
- Volatility: is good if is driven by transparency
- leading indicators of financial crisis
credit spreads
- credit to GDP
- rapid growth of housing credit signals impending recession
- contracts imposed on borrowers - reduced conditions are signs of excessive borrowing
- credit growth
Debt to GDP
- corporate debt growth in China
- dump truck index - real estate boom
- number of cranes visible in urban skyline
- blockchains (mainly used for security keeping)
Bank of America mellow - backup in blockchain
- securities - T+2 in block chain