Financial Regulation in a World of Financial

Financial Reporting and Regulation
in a World of Financial Engineering:
Accounting and the Global Financial
Shyam Sunder, Yale University
Journal of Accounting and Public Policy Conference on
Accounting and the World Economic Crisis
IE University, June 14, 2013
Segovia, Spain
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An Overview
• Great efforts made to write effective
regulatory standards—accounting as well
as prudential—for financial services
• Events of the recent decade show that
these efforts have largely failed to achieve
their stated objectives, both globally as
well as in major economies of the world.
• Why?
• What can be done?
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Overview (Contd.)
• A root cause of these regulatory weaknesses and
failures lies in inability of regulation to deal with
the challenge presented by financial engineering.
– Regulators, constrained by governments, business and
profession, take years to write the rules and
– Their labor of love—carefully drafted regulations—is
soon rendered ineffective when financial engineers
and lawyers design of new instruments, transactions
and organizations to bypass the regulations.
– No amount of wisdom and hard work by regulators,
whether located in Basel, Norwalk, or London, has or
can overcome this disadvantage.
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Overview (Contd.)
• Modern mathematical finance and financial
engineering can bypass just about all written
regulations without difficulty.
• Written regulations, as an instrument of
regulating financial services industry, do not
• What are the alternatives, and their pros and
• No easy solutions.
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Some Maintained Premises of
Financial Reporting and Regulation
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1. Global Standards
General standards of financial reporting and
regulation applied across time, economies,
industries and corporate size and organizational
forms best serve the society (e.g., Basel, IFRS, FAS).
Standardization does save costs and effort, (electrical
plugs, clothing, cars, street grids, commercial codes)
Becomes counterproductive beyond certain limits when
environments to which they are applied are diverse
How do we know the limit of standardization?
Rhetoric of universal accounting standards and universal
language (Esperanto?)
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2. Written Standards
• It is fair and efficient to write down the regulatory
standards for everyone to know and comply with
(e.g., the Code of Hamurabi).
– Written standards promote our sense of fair play in a
democratic society to avoid arbitrariness and partiality
– But all contingencies cannot be anticipated and
written down.
– Written standards constrain discretion in enforcement
– They also serve as “road maps for evasion” and
gaming to take advantage of the rules
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3. Clear Standards
• Clear standards make it easier to know what is
permitted and what is not permitted.
– No standard can be made “perfectly clear”
– No matter how much detail we put in the rules,
there will always be demand for further
clarification and “guidance”; rule books grow
– Do additional details in standards reduce or
increase the loopholes?
– 3 percent rule for Special Purpose Entities =>
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4. The Static Ideal
There exists an ideal set of written reporting
and regulatory standards that, once
discovered and implemented, will induce
corporations and banks to function
efficiently in conformity with the regulations
– Dynamics of the game between managers and
standard setters makes any such static ideal all
but impossible
– Regulatees see standards as constraints and
modify their decisions to seek their own goals
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5. People or Structure
If we select knowledgeable, experienced, selfless, public-spirited, and wise individuals to
constitute bodies that devise regulatory
standards through deliberation and due
process, we can improve the functioning of the
Yes, but individuals stand where they sit.
We place much emphasis on the quality of
Insufficient attention given to the structure of game
that regulators and regulatees play
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6. Crafting Standards through
It is possible to construct or discover
better written regulatory standards
through deliberation in properly
organized corporate entities (Basel
Committee, Federal Reserve, IASB, etc.).
Assumes that such bodies can know the
consequences of their actions (Cartesian
perspective on the problem)
Little evidence in history to support this
Written standards by authoritative bodies
have repeatedly failed to yield their stated
outcomes (e.g., global financial crisis)
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7. Specialization in Setting Standards
Specialist standard setting bodies, standing
ready to address new problems, inquiries
and requests for clarifications help improve
– Their existence encourages a new “clarification”
game targeted at them
– They must keep a full agenda (performance)
– Revenue and budget pressures
– Over time, their written output must accumulate
to a thick rule book (e.g., Basel I, II, III; IFRS)
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8. Distinguishing Good from Bad?
Standard setters can tell which written
standards are better, and why; and what
would happen if a rule were left unwritten
– Little evidence that they know, or can know
– For example, cost-of-capital is the result of
complex interactions among many factors
– These influences cannot be sorted out by ex
ante analysis
– Ex post analysis of data to assess the impact of
regulatory standards is confounded with other
factors which may have changed simultaneously
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9. Regulatory Monopolies
• Granting monopoly power in a given
jurisdiction to standards written by a given
body can help improve regulation
– Informational disadvantage of a monopoly
– No opportunity for experimentation
– No opportunity to learn from the experience of
alternatives; arrogance
– No pressure to do better, or to correct errors
– Pros and cons of regulatory competition
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11. Competition and Race to the
A regime that encourages reporting
entities to choose among the
standards written by competing
organizations (and paying them a
royalty for the privilege) induces a
“race to the bottom” to devise less
demanding standards
– Many counter examples (Stock exchanges,
bond rating services, appliance standards,
college accreditation, bank regulation,
corporate charters across 50 states in
U.S., etc.)
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12. Force and Effectiveness
Increase in the power of enforcement behind
authoritative standards improves compliance
and quality of regulation and reporting
Increased enforcement also increases resources
devoted to evasion
Draconian punishments do not necessarily induce
better behavior
Crime, alcohol and drug abuse (recent report on
failure of the War on Drugs)
Cutting hands of thieves may not be an efficient way
to reduce theft
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13. Statutory Approach Dominates
Common Law
The quasi-statutory approach to
setting regulatory standards (writing
everything down) dominates a
common law approach to financial
reporting (leave significant parts
unwritten, and subject to professional
– Evidence?
– Constitution (U.K., U.S., Singapore)
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14. Written Standards are Better
than Social Norms
Written standards backed by power of
enforcement work better than
unwritten social norms backed only by
internal and external informal
– Social norms govern great parts of our
lives including many aspects of law
– Insider trading example
– Guilty beyond reasonable doubt
– Private commercial codes (cotton,
diamond trades in U.S.)
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15. Who defends the middle ground?
The ideal regulatory regime consists of
either all written standards or all social
– Easier to make the extreme cases for standards
or norms alone
– Difficulty of defending the middle ground where
both written and unwritten standards may coexist, as they do in many other aspects of our
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16. Financial Regulation and
Reporting is Improving
100 years of U.S. federal bank
regulation and 80 years of federal
regulation of securities and financial
reporting has helped improve the
quality of regulation.
– Evidence?
– Is a thicker rulebook indication of better
– Perfect correlation between financial
reports and stock returns?
– How do we judge if regulations are getting
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17. Permitting Fewer Alternatives
Yield Better Outcomes
Fewer the alternatives permitted to
the regulatees, the better the quality
of regulation.
– Fewer alternatives also tie the hands of
the management of well-run companies
who may wish to signal their confidence,
competence and prospects by choosing
reporting practices others find difficult to
– Permitting fewer choices reduce
information through signaling
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18. Monitor’s Bargaining Power
Well-specified standards enhance the
bargaining power of the monitor/auditor visà-vis the regulated organization
– Standards also encourage regulatee to demand:
show me the rule
– Reduced reliance on judgment
– More detailed the standards, greater the part of
monitor’s work that can be replaced by a
computer, and lower the value of the service
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19. Individual responsibility
Written regulatory standards strengthen the
individual responsibility of managers,
regulators, auditors, and investment bankers
for fair representation
– On the contrary, they may undermine individual
responsibility for fair representation and the big
picture by shifting attention to meeting the
letter, not spirit, of the specific provisions and
their wording; check-box mentality
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20. Education
Written standards help improve education
and attract talent to the profession
– Written standards degrade the class room from
reasoning and intellectual debate to rote
– They make it less attractive to young talent
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Emphasis on Written Regulations
• Reasonable arguments for written regulations
• But also, reasonable limitations and criticisms
of excessive dependence on written
• Examine some consequences of increasing
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Credit Rating Agency Reforms
• Efforts to reform credit agencies: require shift
from issuer to investor pays model.
• “Rocked by public and political distaste for the
role they played in the global crisis, the big
three credit rating agencies were expected to
make profound changes—but efforts to
reform have come unstuck.”
Stephen Foley in “Outlook Unchanged,” The Financial
Times, p. 5, January 15, 2013
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Taxation of Multinational Firms
• Tax rates of multinational have dropped in the
recent decades far more than the drop in
national tax rates.
• “Governments want to close loopholes that
help multinationals avoid tax but will have to
balance any crackdown against their need to
attract big foreign investors.”
Venessa Houlder, “Unsafe Offshore,” The Financial Times,
p. 5, January 14, 2013.
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Yen Libor Manipulation
• If you keep the six-month Japanese yen Libor
unchanged for the day, “I’ll pay you $50,000,
$100,000 …whatever you want …I’m a man of my
word.” Hayes of UBS AG.
• “I dun mind helping on your fixings, but I am not
setting libor 7 points away from the truth (69
points). I’ll get UBS banned if I do that.” Darin
• He submitted 67.
– William D. Cohan, UBS Libor Manipulation Deserves
the Death Penalty,” in Bloomberg News, December 23,
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No Free Lunch in Bank Capital
• Basel II raised the bank capital requirement
• Bank responded by getting their loans off their books
through securitization so they will have to hold less
capital (and earn a higher return on it)
• “Capital regulation based on risk-weighted assets
encourages innovation designed to circumvent
regulatory requirements and shifts banks' focus away
from their core economic functions.” "Systemically
Important Banks and Capital Regulation Challenges".
OECD Publishing. December 2011.
• Banks misclassified the risk of their assets to avoid
holding more capital
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Basel II Bank Capital Regulation
• 2007: Capital was 11 percent of risk-weighted
assets for 10 largest US banks
• But if you excluded goodwill, intangibles and
deferred tax assets (which tend to become
worthless under financial stress), their capital
was only 2.8 percent
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How Does Basel III Address this
• More arcane and complex rules for calculating
bank capital (opening more loopholes for
financial engineering your way around the
capital standards
• Set the capital/asset requirement to 3 percent
(about the same as the actual 2007 level)
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Basel I, II, III, … and Counting
• “Each new Basel (bank capital) standard attempts
to correct the errors and unintended
consequences of earlier versions. But instead of
resulting in better outcomes, each do-over has
been more complicated and less effective than
the last. Most disturbingly, each fails to provide
enough real capital to absorb unexpected shocks
to the economy.”
Thomas M. Hoenig (Vice-Chairman FDIC), “Get Basel III Right
and Avoid Basel IV,” The Financial Times, December 12, 2012.
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Consequences of Deposit Insurance
• Shifted the burden of ensuring bank capital adequacy
to regulators from depositors
• Regulators must have written rules to avoid appearing
arbitrary or biased
• Written rules also serve as “roadmaps for evasion”
• Post-FDIC, depositor disinterest in monitoring cut bank
capital from an average of 10 to about 3 percent (about
2 percent for some large EU banks)
• Is it better to shift some (e.g., 50%) or all of the
responsibility for monitoring banks back to depositors
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Financial Engineering and Financial
• These are just a few examples of the conflict
between financial regulation and financial
• How long can the regulatory walls hold?
• Basel I proposed in 1988, and lasted for 16 years
• Basel II proposed in 2004 and lasted less than
half-a-dozen years (until the financial crisis 200710)
• Basel III proposed in 2010, and has already been
hollowed under industry pressure by the end of
2012, even before its implementation began
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Regulation as a Social Phenomenon
• Social phenomena exist macroeconomic,
organizational, and individual levels
• At each level, agents (individuals, organizations, and
– Interact with one another,
– Learn over time,
– Resulting in feedback and endogeneity (X affects Y, as well
as Y affects X)
• I would like to discuss one aspect of such interactions
between financial regulation and financial
engineering, and its consequences
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Why Regulation of Financial Services?
• Financial regulation is a form of regulation or
supervision, which subjects financial
institutions to certain requirements,
restrictions and guidelines, aiming to maintain
the integrity of the financial system:
– to sustain systemic stability,
– to maintain the safety and soundness of financial
institutions, and
– to protect the consumer.
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Regulatory Performance
• Lindgren et al., 1996: In recent years, bank
failures around the world have been common,
large and expensive.
• Llewellyn (1998a) concludes that three common
elements emerge in banking crises: bad incentive
structures, weak management and control
systems within banks, and poor regulation,
monitoring and supervision.
• Why such poor performance?
• Because of interplay with financial engineering
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Objectives of Financial Engineering
• Objective in corporate financial engineering:
to design transactions to optimize from the
point of view of the organization, e.g.,
increase assessed creditworthiness and lower
risk based on facts and appearances of its
financial reports
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Objectives in Financial Engineering
• “The Financial Engineering Concentration
encompasses the design, analysis, and
construction of financial contracts to meet the
needs of enterprises.” (Cornell’s ORIE M.S.
concentration in financial engineering)
• What are these needs?
• In at least some cases, these needs consist of finding
ways of
– Reducing indebtedness on the balance sheet, or
– Reducing expense on income statement, or
– Increasing revenue on income statement, or
– Increasing deductions on tax returns
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• A form of off-balance sheet financing which involves the
pooling of financial assets
• Risk transfer mechanism that allows loan originators to
optimize balance sheet management
• Allows highly rated securities to be created from less credit
worthy assets
• Can be in local or foreign currency, depending on client
• A rapidly growing asset class with proven benefit for
emerging market borrowers
• For summaries of prior deals, please visit finance
International Finance Corporation
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What is Off-Balance Sheet Financing
• Borrow money in such a way so under the
regulatory standards, it does not show up as a
liability on the balance sheet.
• That is, find a way around written standards
so an obligation to pay does not show up as a
liability in the financial reports.
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How and Why Do Loan Originators
Optimize Balance Sheet Management
• Loan originators (e.g., banks) are exposed to risk when
they give loans
• Inclusion of the loan in assets of the firm reflects this
exposure to risk, and limits bank’s ability to make
further loans under prudential regulation
• By devising securitization so the risk exposure is
reduced just below the written regulatory threshold,
bank can exclude the asset from the balance sheet
• This exclusion allows the bank to more more loans
than prudential regulation would otherwise permit
• This is the risk transfer mechanism that allows loan
originators to optimize balance sheet management
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Does Financial Engineering Create
• Allows highly rated securities to be created
from less credit worthy assets
•Payoffs of any asset can be partitioned into
parts, some of which are more risky (and yield
high return) and others are less risky and yield
lower return
• Can the sum of the values of these parts
systematically exceed the value of the
unpartitioned asset in absence of misinformation, mis-estimation, or extraneous
cash consequences such as taxes?
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Financial Regulatory Standards as
Constraints on Financial Optimization
• In such optimization, standards of financial regulation are
treated as constraints
• Most optimization problems have hard constraints—their
violation brings well-specified penalties (dual prices)
• With optimization confined by the production possibilities
set and other such physical limitations, external constraints
make a real difference to the final actions and outcomes
• What kind of constraints do standards offer?
• I am going to argue that these standards offer softer
constraints because the forms of contracts, transactions, as
well as organizational forms that businessmen can devise
and use are beyond the scope of accounting standards
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Redesigning Contracts
• A manufacturer needs to buy a machine for the factory
• Borrowing is an option, but the manufacturer does not
want more debt on its balance sheet
• The leasing subsidiary of a bank buys the machine and
gives it to the manufacturer on a long term lease—
machine is in the factory but no debt on balance sheet!
• FASB writes Standard 13: leases >90%V and >75%T
must be treated as capital leases (debt is back on BS)
• The bank revises the lease to levels below the
thresholds specified in the standard (debt is off the BS)
• FASB goes back to work, and so on … until the leases
rulebook grows to over a 1,000 pages with no end to
this growth in sight
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Redesigning Transactions
• Depending on the current standards of
financial reporting, transactions can be
redesigned to achieve the desired
consequences for revenues, expenses and
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Redesigning the Organization
• When design of contracts and transactions is not
sufficient, organizations themselves can be redesigned,
or new ones created in order to have the desired
consequences for balance sheets, income statements
and tax returns
• Special purpose entities (SPEs and SPVs) are examples
of organizations created for this purpose (see Klee and
Butler 2002 and Gorton and Souleles 2005)
• “Hundreds of respected U.S. companies are ferreting
away trillions of dollars in debt in off-balance sheet
subsidiaries, partnerships, and assorted obligations”
(Henry et al. 2002)
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Asymmetric Game
• Note that financial reporting standards neither have, nor
can have, any say in any of these “business” decisions of
the management
• The role of the accountant and auditor is limited to
preparing financial reports given all these decisions
• While these decisions clearly consider what the accounting
standards are, accountants have little freedom to take into
account how and why these decisions were taken in the
first place
• There is great asymmetry between the freedom available
to the business decision makers and constraints on the
accountant who must abide by relatively rigid written
standards in deciding how to report the performance and
financial status of an organization
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The Net Effect
• The decision to write an accounting standard is a matter of social
policy that calls for a deliberative due process; it typically takes
years to determine which rules might best serve investors and
others. Inevitably, these standards are written on the assumption
that the current forms of contracts, transactions, and organizations
will continue to be used in the future when these standards are
• The decision to change contracts, transactions and organization is
an individual decision that may be taken within days if not hours.
Further, the scope of these decisions is virtually unbounded (except
by the imagination of the businessmen). Soon after the standards
are issued, the environment to which they are applied changes
relative to the what the standards were written for
• The net effect: Financial reporting standards serve as relatively
weak constraints (if at all) on what businesses can do and on what
they report (relative to their underlying economics)
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Why Difficulty Writing Regulatory
Standards for Derivatives?
• Some derivatives are designed to get around the intent
(provision of information) of the extant financial reporting
• How does one write standards for these instruments?
• Is it possible to have an equilibrium between design of such
instruments and standards for reporting them?
• The problem seems to have gone largely unnoticed in the
flurry of proposals on financial reforms now on the table
• The question is: Are the optimization in financial
engineering (relative to prevailing reporting standards), and
search for standards that provide useful information to
investors mutually consistent goals?
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Standards and Language
• Standards of financial reporting and regulation must
necessarily be specified in language
• Language, in order to be useful, must necessarily have certain
imprecision around the meaning of words
• Can we specify precisely the meaning of a house, or shirt, or
table? Instead reliance on usage—a matter of social norms
• What happens if we try to do so?
• Regulators have tried to counter financial engineering by
resorting to the fiction that more precise definitions of words,
e.g., assets, liabilities, income, regulatory capital, etc. will
solve the problem
• But they have not, and they cannot; bound to fail
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A Newspaper Example (of Too-Big-to-Fail)
• Among a number of sensible amendments under
development, Senator Sherrod Brown (D., OH) proposes the
following language:
FINANCIAL COMPANIES.--No bank holding company may
possess non-deposit liabilities exceeding 3 percent of the
annual gross domestic product of the United States."
• A few paragraphs later, the language considers derivatives:
• "OFF-BALANCE-SHEET LIABILITIES.--The computation of the
limit established under subsection (a) shall take into account
off-balance-sheet liabilities."
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Regulatory Language as a Constraint
• A strong provision for requiring prompt corrective
action if any bank exceeds this hard size cap.
• How many financial engineers and accountants think
that this is a hard cap on size, or if it is a cap at all?
• What will happen if this language became the law to
cap the size of financial institutions? (independent of
whether you think their size should be capped)
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Yet the Debate Goes On
• Naturally, the Federal Reserve is pushing back.
• The Fed's argument is that any kind of size limitation would be
too blunt an instrument - successful regulation requires
nuance and subtlety.
• Perhaps, but there's a big problem with relying on subtle
regulators. Over the past thirty years, almost all our regulators
and supervisors have become either sleepy or captured - in a
cognitive sense - by the very people they are supposed to be
watching over. (Chapters 3 and 4 in 13 Bankers document this
in detail)
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These are Good Points, but Largely
• … Or just think about this. The New York Fed is run by a senior
executive of Goldman Sachs. At the same time, the former
head of the New York Fed holds a top position at Goldman where he is responsible for interacting with regulators around
the world. And the practices, if not the explicit rules, of the
New York Fed apparently permit its board members to buy
stock in companies that the Fed oversees. Please explain
exactly how this web of arrangements will help keep
regulation strong and effective moving forward.
• The point is: Can regulatory and accounting rules written in
English words serve as effective constraints on financial
• My answer is no. I hope this is not true.
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Social Norms of Accounting and Finance
• I personally doubt that a non-cooperative game between
financial engineers and regulators has led us to a socially
efficient outcome
• Regulators have, over the past eight decades, increasingly
come to rely on written rules as opposed to their judgment
and social norms of their profession
• Financial engineers, on the other hand consider it their own
professional duty to design whatever
instruments/transactions/organizations will best serve the
immediate interests of their clients under the prevailing
written standards of financial reporting
• Social norms play a diminishing, if any, role on either side
• Is it possible that some part of the blame for the systemic
failures of the recent years may be linked to this diminishing
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Ethics and Moral Code in Business
• Shiller: “Many schools now offer a course in business ethics, and
some even try to integrate business ethics into their other courses.
But nowhere is ethics seen as the centerpiece or even integral part
of the curriculum. And even when business students do take an
ethics course, the theoretical framework of the core courses tends
to be so devoid of any moral content that the discussion of ethics
must seem like some side order of overcooked vegetable”.
• If the role of ethics in curriculum is minimal, what is the role of
ethics (i.e., social consequences of our work) in choosing the
substantive topics of our research
• Identifying mispricing of securities, for example, may help move
prices to more efficient levels
• What about identifying a way of redesigning a transaction so a
financial obligation will not show up on the balance sheet under the
prevailing regulatory standards?
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In Summary
• With the development of mathematical finance, financial
engineers rapidly redesign transactions, instruments, and
business entities to render prudential and reporting
regulation in the financial services ineffective.
• This new reality has been a key element of the celebrated
regulatory and reporting crises of the past dozen years.
• Band-aid solutions for this new fundamental reality (such
as Basel III and IFRS fair value accounting) have little
prospect of success
• What, if any thing, should we, and can we do about this?
• Are there some alternatives to bringing in a sense of social
responsibility for the consequences of our research
agendas? If so, let us explore them.
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Good Banking is Boring
• Our lives depend on efficient functioning of many
systems (e.g., electrical wiring, plumbing, foundations
of our buildings, telephones, and computer networks)
• All such essential and critical systems are made
efficient and routine to the point of being boring, low
paying jobs, following pre-specified procedures and
• Innovations are slow, but made only after much
experience and regulatory deliberation.
• Excitement in such essential fields portends disaster
(e.g., electrical wiring of Boeing 787 Dreamliner)
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Creativity in Finance
• These consequences of financial engineering suggest
that the social consequences of creativity in finance
can be as socially detrimental as creativity in
• Objects of finance consist of (are defined) entirely by
the relevant covenants and the accounting system
• To the extent financial institutions have significant
social externalities, and receive special support in form
access to borrowing from the central banks
• Their transactions have to confined to those
conforming to a pre-approved template.
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A Lesson from History
• Financial services became exciting and high-paying in
the 1920s, and dropped to a low level after the great
crash of 1929.
• After half-a-century of excitement and high paying jobs
and finance, we have seen another global crisis.
• We need to assess the contribution of the new finance
to GDP and social welfare, and assess if it is better to
return it to a boring trade which is confined to a small
set of pre-approved transactions.
• Remuneration of people working in such an industry
will return to low levels, but the rest of society may be
safer and prosperous.
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New Problems, New Solutions
We may often assume that financial
regulation and governance problems
originated in the 20th century
– History tells us otherwise
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Westminster Hall
Trial of Warren Hastings
London: Published for the Proprietor by J. Mead, 10, Gough Square, Fleet Street
Sunder: Financial Regulation & Engineering
Thank You.
[email protected]\faculty\sunder
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Hans J. Blommestein, “The Financial Crisis as a symbol of failure of academic finance (a
methodological digression), The Journal of Financial Transformation, Fall 2009.
G. Gorton and N. Souleles, “Special Purpose Vehicles and Securitization,” FRB Philadelphia Working
Paper, 2005.
Henry, David, Heather Timmons, Steve Rosenbush, and Michael Arndt (2002), “Who else is hiding
debt?,” Business Week (January 28), 36-37.
J. Huber, M. Shubik, and S. Sunder, “Default penalty as disciplinary and selection mechanism in
presence of multiple equilibria,” Cowles Foundation Working Paper 1730, October 2009.
K. Klee and B. Butler, “Asset-Backed Securitization, Special Purpose Vehicles
and Other Securitization Issues,” Uniform Commercial Code Law Journal 35 (2002), 23-67.
J. Mason, E. Higgins and A. Mordel, “Asset Sales, Recourse, and Investor Reactions to Initial
Securitizations: Evidence Why Off-balance Sheet Accounting Treatment Does not Remove Onbalance Sheet Financial Risk” LSU Working Paper, 2009.
Robert J. Shiller, “How Wall Street learns to look the other way,” The New York Times, Feb. 8, 2005.
Shyam Sunder. Theory of Accounting and Control. Southwestern Publishing, 1997.
Shyam Sunder, “Determinants of Economic Interaction: Behavior or Structure.” Journal of Economic
Interaction and Coordination 1, no. 1 (May 2006): 21-32.
Shyam Sunder, “’True and Fair’ as the Moral Compass of Financial Reporting,” in Cynthia Jeffrey,
ed., Research in Professional Responsibility and Ethics in Accounting (Forthcoming 2009).
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