Mary C. Daly

Is your institution's CECL model “fit for use” when evaluating the potential credit and capital exposures? If not, what do you need to do today to prepare? Join experts Mark Haberland & Chase Ogden of Darling Consulting Group as they share insights from recent model validations through real-life examples of how solid foundational documentation can enhance credit risk mitigation and improve your institution’s resilience in any economic climate. Register today for this 1-hours session: https://bit.ly/3XghbRZ #FMS #FMSWebinars #CPE #education #financeindustry #professionaldevelopment #risk #CECL #ModelValidations #CreditRiskMitigation

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Research piece released today by Karen Petrou, paid for by PNC Financial, is telling. It’s purpose is to provide analysis of new FDIC proposals around bank mergers. Separately the DOJ recently also made assertive statements on this topic from an anti-trust perspective. Mid-size banks, which are a vital part of our country’s financial ecosystem, are under existential threat from fintech, private capital, and the growth of the largest banks. Merging and consolidations are critical strategic options for these banks. But FDIC proposals regarding such transactions will likely chill that activity. A barbell of large banks and small banks but few/no midsize banks could be the outcome. The path to that outcome has a lot of disruption and asset movement. The result could be to further enlarge and galvanize the role of nonbanks. Is moving more traditional bank activities out of a highly regulated system wise? Efficiency of capital use, regulatory “arbitrage”, and the coming revised Basel III Endgame proposal are sucking a lot of air out of the room. Increasing hurdles for bank mergers turns up the heat, perhaps at the wrong time. For most of us, this is distracting background noise, but the mortgage banking market landscape could be witnessing the early stages of a generational change.

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KBRA released #research analyzing the magnitude and change in #distressrates by property type nationally and across the largest 20 metropolitan statistical areas (#MSA) in U.S. private-label CMBS 2.0 between September 2023 and September 2024. Read the full report here: https://lnkd.in/e-kMx7Nx | #insightfulresearch #cmbs #structuredfinance

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To toot my own horn: I suggested securitizations of sub lines in 2022 during a Q&A portion of a panel at the annual Fund Finance Association conference (Wrote about it in 2023, below). Initially, people felt the structure just wouldn't work due to the short, revolving nature of the loans. Two years later, behold the first broadly syndicated, publicly rated sub line securitization from Goldman Sachs. Will be interested to know if the deal is structured like a CLO (it will, like a CLO, be actively managed, presumably with warehoused lines ready to fill in for amortized lines in the pool), maybe even with buckets for other instruments like structured finance or leveraged loans? Maybe there are some term loan pieces involved? At some point this was going to happen regardless, but trade journos don't often get a chance to claim this particular kind of credit, so I'm doing it anyway, lol. Goldman, DM me for my venmo 😂

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Sovereign's Charles "Chuck" Failla, CFP® had the opportunity to present for the The New York Public Library about: Sequence of Return Risk. 👉 The full replay of that presentation is now available at: https://lnkd.in/e8UdNvX2 #financialplanning #riskmanagement #CFP #wealthmanagement

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Another thread on nonfarm payrolls revisions -- An alternative jobs indicator says that the underlying pace of job growth is most likely <100k currently. https://lnkd.in/eT4ppXQ7 During the pandemic, both the Fed and the CEA – relied on high-frequency alternative indicators to track real-time developments in the labor market. One of those indicators is Homebase, a software company that help businesses and employees track payrolls and work hours. It currently covers 100,000 businesses and around 2 million hourly employees in the US." Homebase can predict nonfarm payrolls well in the past, but curiously the linear relationship between the two measures started to breakdown after March 2023. That date is significant because it is the cutoff of BLS annual benchmark revisions (so post March 2023 has not been subjected to QCEW revisions).

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Fed Chair Jay Powell will deliver his annual remarks this Friday at the Fed’s Jackson Hole Economic Symposium. With the Fed poised to start its rate-cutting cycle next month, any hints on the size and speed of the adjustments will be highly sought. His earlier speeches there, which tell us a considerable amount of how he thinks at a high level about monetary policy, are a good preview. Here are my takeaways -- text and more details in my Substck post -- from his earlier remarks: 2018: Go slow unless it’s a crisis. 2019: Pay attention to the risks. 2020: A strong labor market is not a threat on its own. 2021: Don’t overreact to temporary inflation. 2022: There will be pain. Or not. 2023: Build confidence under uncertainty. Powell often appeals to the lessons of history for monetary policy, whether it’s from the Great Inflation of the 1960s or the Volcker Disinflation of the 1980s. However, this inflation cycle has defied the playbook in some ways. There are several principles in Powell’s first six Jackson Hole speeches that are relevant today, and there are many open questions on how his Fed might apply them. Those are the answers you should be listening for on Friday. https://lnkd.in/eyv6BVT3

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SBI Financial and Economic Research Institute published the result of the "Survey on General Consumer Interest in and Usage of Next Generation Finance, Second Volume, 2023". https://lnkd.in/gQf7_YN2 The objective of this survey is to clarify the public perceptions of new digital financial products such as crypto assets, NFTs, security tokens, and stablecoins. It seeks to explore future investment intentions and past investment performance, purpose of acquisition and holding, investment styles such as trading frequency, and information sources for investments. The institute aims to make individual-level data publicly available, serving as a research infrastructure for researchers and others interested in analyzing new digital financial products.

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The Yale model, pioneered by David Swensen at Yale University, is an investment strategy for institutional portfolios, particularly university endowments. It emphasizes diversification beyond traditional stocks and bonds by allocating significant portions to alternative asset classes like private equity, venture capital, hedge funds, and real assets (e.g., real estate). The strategy seeks to reduce dependency on public markets and capture the "illiquidity premium," the higher returns expected from long-term, less liquid investments. The Yale model relies on the assumption that nontraditional assets are less correlated with public markets, helping to achieve higher overall returns with reduced volatility over time. Now we are in the middle of the period when universities publish their annual endowment reports. This interesting article by Jessica Hamlin explains brilliantly how the University of Virginia's (UVA) endowment significantly underperformed its benchmark for the fiscal year ending in June 2024. The apparent cause was that over 25% of its portfolio was invested in private markets. This sparked questions: why don’t these multibillion-dollar endowments, which fund academic and student activities, adopt a simpler, "safe" 60/40 portfolio of stocks and bonds? As universities report annual returns, this debate is timely. In 2024, UVA underperformed by over 50%, raising concerns about risk. However, top endowments manage large amounts of capital with a duty to grow those funds for students, faculty, and donors. A 60/40 mix might offer stability, but while it may miss short-term public equity gains, it shields against large losses, as seen in 2022 when global equities dropped 15.4%, but UVA’s endowment only fell 4.7%. Critics, like hedge fund manager Cliff Asness, argue this premium masks volatility since private funds aren’t revalued daily like public stocks. Others, like VCU's Bruce MacDonald, question whether models fully account for the costs of illiquidity, especially as private equity dealmaking slows. Now is a crucial time to reassess whether these long-standing investment frameworks will sustain endowments into the future. As Jessica Hamlin states, past success may not guarantee future returns. https://lnkd.in/e-UXnQU3

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Don't let your non-profit organization be penalized for non-compliance of the Uniform Prudent Management of Institutional Funds Act (UPMIFA). Check out our deep dive into who this important act applies to and the key compliance components of the law.

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What are the economic implications of changing expectations around U.S. elections? 🎙 🎙 🎙 Inside Economics Podcast Episode 174 on Surveys, Sentiment and Stamps. John Leer, chief economist from Morning Consult and frequent Inside Economics guest, joins the team to discuss the last week’s slew of (mostly) very good economic data. John discusses the latest consumer sentiment surveys and why they have diverged so sharply from observed consumer behavior. He also talks about changing expectations for the upcoming presidential election and Senate races in light of recent political events. https://lnkd.in/eFq6nUyn

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Join us on September 26th, 2024, for an insightful webinar titled "Women, Wealth, and Well-Being – Empowering Financial Confidence." Presented by Asset Strategy & BlackRock Speakers: Danielle Lore, Vice President, BlackRock Business Consulting Jian Wei Fu, CFP®, EA, Financial Consultant, Tax Consultant During this webinar, our expert speakers will guide you through: - The Rise of Women’s Financial Power: Learn about the growing influence of women in the financial world and the key factors contributing to this trend. - Investing for Well-Being: Explore how women can build a strong financial foundation, align their investments with their values, and navigate market uncertainties. - Goal-Setting and Financial Planning: Understand how to set specific, measurable, and achievable financial goals to create a secure financial future. - Overcoming Financial Challenges: Address common obstacles women face in wealth management, including pay gaps, career breaks, and caregiving responsibilities. plus more! Whether you're a seasoned investor or just starting your financial journey, this webinar will provide the insights and strategies you need to manage your wealth confidently. Don’t miss this opportunity to take control of your financial future. Register now to secure your spot! Secure your spot: https://lnkd.in/eTsN99SG

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Being a treasurer is a specialist role, but it may come as a surprise to outsiders to learn that within that specialism are specialists In the first of a new TMI miniseries ‘Treasury Angles’ looking at treasury in non-corporate settings, we speak with Alexandros G. Koliavrás (ING Americas) and Thomas Maurer from the banking and FI space, and discover some important differences alongside the many similarities. Read article: https://lnkd.in/epMzCdQw #treasury #corporatebanking #ing

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Banks reporting their energy supply ratios, which compare rates of lending to fossil fuel projects and clean energy projects, should be required to do so in a way that allows easy comparisons across institutions, writes Rémi Hermant, of Reclaim Finance, in American Banker’s BankThink.https://bit.ly/4hmknDA

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I'm published in this week's Barron's (1.2 million paid subscribers). -- Are you, like me, over 54 years old? Did you know that by the definition commonly used by economists and policymakers you are no longer a "prime age" worker? -- My Barron's op-ed argues that this is bad framing for addressing our critical labor force challenges, and is one more reason we are overlooking one of our best and most overlooked talent pools: older workers. There's clear academic evidence of bias against older workers, and just as with my work on second chance hiring, employers must approach this untapped resource with knowledge and intention. Doing so creates access to a great talent pool and gives companies a competitive edge. -- If you don't subscribe and are having trouble accessing the article but want to read it, DM me with your email. Barron's gave me a link that offers access behind the paywall for a limited number of views. #economics #UntappedTalent #laborshortage #labor

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This week's Inside Economics podcast dissected the latest U.S. employment report, showing total nonfarm payroll employment was essentially unchanged in October (+12,000). We then turned to the question of U.S. productivity exceptionalism and whether recent gains are sustainable. Moody's Analytics Senior Director Dante DeAntonio joins the podcast to discuss the October employment report. Recent strikes and hurricanes weighed on the headline jobs figure, but everyone agrees that underlying job growth remains strong. Colleagues Cristian deRitis, Marisa DiNatale and Mark Zandi debate why productivity growth in the U.S. has outpaced the rest of the world, but DeAntonio remains skeptical that recent productivity success is sustainable. https://lnkd.in/e2qgqR3a

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The figure below shows results of the Conference of State Bank Supervisors (CSBS) Q2 2024 Community Bank Sentiment Index. Sentiment is mostly neutral with one glaring exception, Regulatory Burden which is 80 points below neutral! This is near the all-time record low. Given relatively high interest rates, the invested yield curve, and high prices for homes and consumer goods, consumers and bankers are facing a number of hurdles. Financial regulators need to focus on opportunities to streamline, consolidate, and reduce regulatory burden, and not increase regulatory burden, so banks can lend, and the economy can prosper. https://lnkd.in/eq4hYTtJ

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