Zicklin-Capco annual
conference wrap up
Christopher Hamilton, Partner - Capco
Thanks to our speakers and panelists !
2 - Zicklin - Capco Wrap up and overview
Capco confidential - © Capco - February 2012
Panel 1 – Impact of global capital adequacy
regulation on operations and profitability
Chair: Linda Allen, William F. Aldinger Chair in Banking and Finance,
Zicklin School of Business, Baruch College
Summary

Paper – Viral Acharya, Stern School
 Is there a capital shortfall LRMES?
 Capital should be based on the individual institution’s affect on the system but not excess capital
to hold for others
 Use capital to manage size of banks and fix sovereign debt Basel III capital

Panel
 Craig Lewis– SEC - Basel III augmented by structural rules (central clearing, title 7, Volker,
Resolution authority etc.)
 Gary Gluck – Credit Suisse – Regardless of whether the objective is to eliminate risk- liquidity
risk is critical and requires consistency
 Jason Cave – FDIC – Basel III –liquidity, ABS Risk Weighting, VAR un-forseen consequences,
internal models, leverage rules
 Sean Culbert – Capco– Other dangers of Re-hypothecation, high frequency trading, Volker
lowers liquidity?
ARE WE TOO FOCUSED ON THE BANKING ARENA CONSIDER THE IMPACT TO ECONOMY
AND SHADOW BANKING
LEHMAN WAS THE SOLUTION TO US RE-CAPITALIZATION- EU NEEDS TO DO THE SAME
3 - Zicklin - Capco Wrap up and overview
Capco confidential - © Capco - February 2012
Panel 2 – The evolving financial regulatory
environment
Summary

Panelists
Roberta Romano, Yale Law School
 A proposal for non harmonized regulation
 Harmonization can cause the systemic
concentrations
 A system to make nations fund departures
and a review process

Chairman: Rodgen Cohen, Partner and Senior
Chairman, Sullivan & Cromwell LLP
Panelists:

Michael S. Helfer, General Counsel, Citi

Seth E. Lipner, Professor of Law, Zicklin
School of Business, Baruch College

David Meister, Director of Enforcement, CFTC

Edward P. O'Keefe, General Counsel, Bank of
America Corporation

Joseph Polizzotto, General Counsel –
Americas, Deutsche Bank AG

Betty A. Whelchel, General Counsel - CIB
Americas, BNP Paribas
Panel
 Focus on capital charge vs Risk Weighting
 Debate on removal of hastily designed
rules
 Un-forseen consequences of
standardization
 Funding regulators – too little – too
fragmented
 Incentives need to be reconsidered – clawbacks have unintended consequences
4 - Zicklin - Capco Wrap up and overview
Capco confidential - © Capco - February 2012
Panel 3 – Future of financial services
Summary


Panelists
Mark J. Flannery. Bank of America
 Financial services has increased to 28% in
the last 25 years of total GDP vs levels of 13
% in years past
 Not looking ahead enough on market factors
 Use return on market equity to address cost of
debt vs equity
 Demographics – US will need to deal with
new financial planning and consumer
products
Panel
 Much change
 Be careful to address unintended
consequences
 Do not stifle innovation
 Utilities add transparency but take away
spread – new instruments will appear
 Don’t regulate for competition (transport
industry)
5 - Zicklin - Capco Wrap up and overview
Chairman: Nick Jackson, Member of the Board
of Editors, Journal of Financial Transformation,
and Partner, Capco
Panelists:

Joe Anastasio, Partner, Capco

Michael C. Bodson, Chief Operating Officer,
Depository Trust and Clearing Corp.

Scott A. Hill, SVP and Chief Financial Officer,
InterContinental Exchange, Inc.

Nicholas C. Silitch, Chief Credit Officer,
Prudential

Randy Snook, Executive Vice President,
SIFMA
Capco confidential - © Capco - February 2012
Panel 4 – Managing risks in the post-crisis world
– can the old tools still be applied
Summary

Panelists
Emanuel Derman, Professor ,
Columbia University
 Models and theories can only show
what it is “like” not what is
 Risk is more complicated than most
financial models
 Financial institutions fallen into a
reliance on models vs behaviors

Chairman: Sandeep Vishnu, Partner, Capco
Panelists:

Caryl Athanasiu, EVP and Chief Operational
Risk Officer, Wells Fargo & Company

Bruno Dupire, Head of Quantitative Research,
Bloomberg L.P.

Dilip B. Madan, Professor, Robert H. Smith
School of Business, University of Maryland

Leon Tatevossian, Senior Risk Manager,
Group Risk Management, RBC Capital
Markets, LLC

Leo M. Tilman, President, L.M. Tilman & Co.,
and Faculty, Columbia University
Panel
 Risk is more complicated than most
financial models
6 - Zicklin - Capco Wrap up and overview
Capco confidential - © Capco - February 2012
Summary
Three and a half years later
1 Have we ever seen such a bi-polar view on the solutions for Financial Services?

Obama vs Gingrich on Dodd Frank

Rules vs Principles

Basel III works vs not

Use capital surcharge vs liquidity and other structural rules

Capital and Supervisory harmonization

Central clearing vs not
2 Un-forseen consequences of multiple rules and overlays

One court case , one hearing, one bill , one election

Capital + Liquidity + Systemic risk surcharge + rules + supervision

Shadow banking
3 Use market factors to regulate/capitalize

Capital

Non standard local regulation (and supervision)

Return on market capital
7 - Zicklin - Capco Wrap up and overview
Capco confidential - © Capco - February 2012