|  Policies to Address Banking Sector Weakness: Evolution of Financial Markets and Institutional Indicators
Ivan Guerra, R. Barry Johnston, André O. Santos, and Karim Youssef. Monetary and Capital Markets Department. International Monetary Fund. October 7, 2009.
This paper reviews the impact of measures to address the global banking crisis in the United States and Europe through mid-2009. It does so from three different perspectives: financial institutions, markets, and stakeholders. The policies addressed immediate pressures on bank liquidity through mid-2009, but profitability of large complex financial institutions worsened, their tangible common equity (TCE) remained at a critical level, and asset quality weakened. In addition, market confidence remained weak, with credit markets highly dependent on official support. Since the measures by governments at end-March (including the G-20 meetings), the business environment in which some banks operate has improved, but a deterioration in the economic environment could impair the fragile recovery by banks.
 International Cooperation to Modernize Financial Regulation
Testimony of Mr. Daniel K. Tarullo, Member of the Board of Governors of the US Federal Reserve System, before the Subcommittee on Security and International Trade and Finance, Committee on Banking, Housing, and Urban Affairs. Washington D.C., United States. September 2009.
I will review the responses of key international regulatory groups to the financial crisis, including both substantive policy responses and the organizational changes in membership and working methods in some of those groups. Next I will describe specifically the role of the Federal Reserve's participation and priorities in these international regulatory groups. I will conclude with some thoughts on the challenges for international regulatory cooperation.
 Liquidity Identity Card
Committee of European Banking Supervisors (CEBS). June 2009.
In the context of domestic-based liquidity regimes within the European Union, the proposed “Liquidity Identity Card” aims at providing supervisors of European cross-border groups with a single prudential language in order to enable meaningful exchanges of information in going-concern situations, in particular within colleges of supervisors. The qualitative and quantitative information provided in the liquidity ID is designed to enable the supervisors of a cross-border group to gain a common understanding of the liquidity risk and resilience of a group and its entities (subsidiaries and branches) in both the short and longer term, given the specificities of the group's business and its risk tolerance.
Recommended Readings
 Time to Buy or Just Buying Time? The Market Reaction to Bank Rescue Packages
Michael R. King. Monetary and Economic Department. BIS Working Papers
No 288. Bank of International Settlements.
This paper reviews the market reaction to bank rescue packages announced in six countries between October 2008 and January 2009. The study distinguishes the impact on creditors as seen in the change of CDS spreads from the impact on shareholders as seen in the movement of bank stock prices. Government interventions benefited creditors at the expense of shareholders. Despite a brief positive reaction, bank stock prices continued to underperform in all countries except the United States where the favorable terms of the government support allowed bank stocks to outperform.
FDIC: Quarterly Banking Profile
Second Quarter 2009.
Report on Special Purpose Entities
The Joint Forum. Basel Committee on Banking Supervision. September 2009.
This paper is intended to meet two broad objectives. First, it is meant to serve an informational purpose by describing the variety of SPE structures found across the financial sectors, the motivations of market participants who rely on them, and how effectively certain structures achieve the transfer and management of risks (credit risk, interest rate risk, liquidity risk, market risk and event risk). A second objective is to suggest policy implications and issues for consideration by the supervisory community and market participants.
The FDIC’s Small-Dollar Loan Pilot Program: A Case Study after One Year
The FDIC’s Small-Dollar Loan Pilot Program began in February 2008. The pilot is a two-year case study designed to illustrate how banks can profitably offer affordable small-dollar loans as an alternative to high cost credit products, such as payday loans and fee-based overdraft protection. This article summarizes results from the first four quarters of the pilot, highlights factors that have contributed to the success of participating banks’ programs, and presents the most common small-dollar loan business models through case study examples.
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