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Why is the regulatory review not for some named date in the past?

by noja 6y ago

LatteLazy 6y ago
Or the average over 12 months?
- deleted 6y ago
  [deleted]
- pgwhalen 6y ago
  An average of a financial portfolio over time won’t be a good measure of risk taking during that time period. Consider, for example, a portfolio of two securities A and B who have mostly offsetting risk. If you own one million units of A on Jan 1 and zero units on Dec 31, but the opposite is true for B, while the average holdings over the year appear not risky, the risk on Jan 1 or Dec 31 is extreme.
1e-9 6y ago
Good question. Given the apparent issues with pre-defined point-in-time reviews, the authors suggest continuous or random-time reviews instead.
jeofken 6y ago
My guess is that few if any institution can run a SQL query with AS OF to get a view of the state of the company at a certain date, but that this information instead is spread out in a hundred databases, paper files, obscure locations known by James on floor 4, etc.
- thedudeabides5 6y ago
  Actually Excel. It's sitting in COBOL, SQl, and then mostly XL. And then yes, paper.
  - deleted 6y ago
    [deleted]
- OJFord 6y ago
  Yeah, but it wouldn't be if that were the requirement.
  - sgt101 6y ago
    Which it should be. The fact that it isn't puts all of us on the hook for the next $trn bail out, if we are lucky enough to see administrations that act fast enough to do it and have the head room to do it. If not, welcome to a real depression.... The truth is that as a society we can't afford this, and it is flat out negligent that we are being exposed to it. Of course the drivers are to cover up the realities of the exposures of certain institutions because they can't get out of their hole and don't really want to. Someone needs to get a grip on this and drive change in the real situation, the regulations and the culture much faster and harder.
    - jeofken 6y ago
      No law of nature says government should use tax money or print money to fund failing banks. Doing so is centrally planning banking, and almost be definition less efficient, just like central planning of any market (such as currency markets by way of central banking)
  - jeofken 6y ago
    This kind of thinking is the same as looking at a software product and thinking “I could hack that in a weekend”. It’s more complex than our first intuition. I’d prefer the other way - remove government intervention in banking, but also remove government protection with bail outs and central banking.

Why is the regulatory review not for some named date in the past?

by noja 6y ago

Why is the regulatory review not for some named date in the past?

LatteLazy 6y ago

Or the average over 12 months?

deleted 6y ago
[deleted]
pgwhalen 6y ago
An average of a financial portfolio over time won’t be a good measure of risk taking during that time period. Consider, for example, a portfolio of two securities A and B who have mostly offsetting risk. If you own one million units of A on Jan 1 and zero units on Dec 31, but the opposite is true for B, while the average holdings over the year appear not risky, the risk on Jan 1 or Dec 31 is extreme.

1e-9 6y ago

Good question. Given the apparent issues with pre-defined point-in-time reviews, the authors suggest continuous or random-time reviews instead.

jeofken 6y ago

My guess is that few if any institution can run a SQL query with AS OF to get a view of the state of the company at a certain date, but that this information instead is spread out in a hundred databases, paper files, obscure locations known by James on floor 4, etc.

thedudeabides5 6y ago
Actually Excel. It's sitting in COBOL, SQl, and then mostly XL. And then yes, paper.
- deleted 6y ago
  [deleted]
OJFord 6y ago
Yeah, but it wouldn't be if that were the requirement.
- sgt101 6y ago
  Which it should be. The fact that it isn't puts all of us on the hook for the next $trn bail out, if we are lucky enough to see administrations that act fast enough to do it and have the head room to do it. If not, welcome to a real depression.... The truth is that as a society we can't afford this, and it is flat out negligent that we are being exposed to it. Of course the drivers are to cover up the realities of the exposures of certain institutions because they can't get out of their hole and don't really want to. Someone needs to get a grip on this and drive change in the real situation, the regulations and the culture much faster and harder.
  - jeofken 6y ago
    No law of nature says government should use tax money or print money to fund failing banks. Doing so is centrally planning banking, and almost be definition less efficient, just like central planning of any market (such as currency markets by way of central banking)
- jeofken 6y ago
  This kind of thinking is the same as looking at a software product and thinking “I could hack that in a weekend”. It’s more complex than our first intuition. I’d prefer the other way - remove government intervention in banking, but also remove government protection with bail outs and central banking.