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Strong words from Finance 2.0 gurus at SXSW

Replied Mar. 21, 2009

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Gary Schurman commented on Lawrence A. Rothman, CFA's blog post 'BIS Survey: Will the central banks take this to heart?'

Just because there is a link between risk and interest rates doesn't prove causality. It seems that the "in thing" to do is blame the Fed for low interest rates which caused, or fueled, the crisis. And what interest rates are we talking about? The F…

December 8, 2009

Gary Schurman and Brandon are now friends

November 25, 2009

Gary Schurman commented on John Stoj's blog post 'Anyone else read this headline and think it's a bit of a problem?'

How can you blame the government for cheap money? Are interest rates immune from the forces of supply and demand? In a recession no one wants to invest. Less demand for borrowings gives us lower interest rates.

November 11, 2009

Gary Schurman commented on John Stoj's blog post 'Anyone else read this headline and think it's a bit of a problem?'

If you wait for the dollar to become stronger, housing prices to come back, frugal and skittish consumers to become less frugal and skittish, etc. it will be too late. If the stock market is truly a leading indicator then the recent buying activity…

November 10, 2009

Gary Schurman and Alice Lee are now friends

October 26, 2009

Gary Schurman commented on JJ Hornblass's blog post 'The CEOs-Say-the-Darndest-Things File: BB&T Corp. Chairman John Allison'

I agree with Andrea. For Allison to say that the cause of the crisis is the Fed and the cause of the housing bubble is Fannie and Freddie is just plain stupid. I'm a Free Market kind of guy but to let the economy collapse "just to teach us a lesson"…

October 6, 2009

Gary Schurman commented on JJ Hornblass's blog post 'FDIC Insurance Fund Is Broke'

Thats what Basel II was supposed to address. Rather than go by risk-based capital ratios (which are fixed - 100% for an auto loan vs 50% for mortgage vs 20% for gov security etc) banks would have to quantify their own risk. Assuming that the models…

September 29, 2009

Gary Schurman commented on JJ Hornblass's blog post 'Startup of the Day: Cortera'

JJ, Would you elaborate on.. 670 Ficos didn't perform as 670 Ficos were expected to perform

September 23, 2009

Gary Schurman replied to Dennis Santiago's discussion 'Do you believe? Is economics on sound foundations?' in the group Risk Analytics

Wicked Witch: Mirror, mirror on the wall, who's the fairest of them all? Mirror: Baby, you are! How did the mirror come up with that answer? The mirror's first answer was "Baby, it ain't you". Being that this response was unacceptable the Witch had…

September 22, 2009

Gary Schurman and Marcie Belles are now friends

July 27, 2009

Gary Schurman commented on JJ Hornblass's blog post 'Why Bair Will Lose Her Fight with Geithner'

...Geithner camp that argues systemic risk should be monitored and minimized when it pops up. And there is the Sheila Bair camp that says the prospect of concentrated systemic risk should be eliminated before it has a chance to surface... How do yo…

July 1, 2009

Gary Schurman commented on William Dunkelberg's blog post 'Restructuring FDIC fees to appropriately replenish the insurance fund'

Its good to see that someone is thinking. Economies of scale - One of the reasons that you could pay such huge multiples for bank acquisitons was the belief that you could swallow up the target bank's assets and cut expenses (economies of scale), t…

May 21, 2009

Gary Schurman commented on Chris Lamela's blog post 'Mortgage Crisis Came from Forgetting the Meaning of the Word ‘Risk''

Dennis, as a true believer in academic mathematics I must come to the defense of the quants. One of my graduate school professors (Mehra) told me "Schurman, I can teach my students finance, but I can't teach them the art of finance." Mathematics is…

May 13, 2009

Gary Schurman replied to Dennis Santiago's discussion 'Brainstorming the Box: How would you solve the frozen wasteland of lending origination?' in the group Risk Analytics

Bank values are driven by return on equity (assets x asset yield / capital) so in normal times there is the incentive to increase earning assets (i.e. lend) while keeping the capital balance fixed thus increasing ROE, which increases bank value. You…

May 13, 2009

Gary Schurman commented on JJ Hornblass's blog post 'You Really Don't Want to Manage Risk That Way'

Exactly my point. Providing data to regulators is not risk management, its reporting.

April 30, 2009

JJ Hornblass replied to Gary Schurman's discussion 'Stress Testing Mandate' in the group Structured Finance

Big day tomorrow with the 19 banks getting results of their stress tests in the form of "white papers" from the Fed.

April 23, 2009

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Applied Business Economics

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Gary Schurman's Blog

Subprime Securitization and the Credit Crisis

There is a very good article in this month's Financial Analysts Journal (March/April 2009 issue) called "Tumbling Tower of Babel: Subprime Securitization and the Credit Crisis". Good introduction to structured finance and systematic risk and how it relates to the current crisis. Every now and then the journal has an article that is both interesting and relevant. This is one of them.

Posted on March 31, 2009 at 7:19pm — 1 Comment