FEDERAL RESERVE BANK OF ST . LOUIS RE V I EW SEPTEMBER / OCTOBER 201 0 395 The Geographic Distribution and Characteristics of U.S. Bank Failures, 2007-2010: Do Bank Failures Still Reflect Local Economic Conditions? Craig P. Aubuchon and David C. Wheelock The financial crisis and recession that began in 2007 brought a sharp increase in the number of bank failures in the United States. This article investigates characteristics of banks that failed and regional patterns in bank failure rates during 2007-10. The article compares the recent experience with that of 1987-92, when the United States last experienced a high number of bank failures. As during the 1987-92 and prior episodes, bank failures during 2007-10 were concentrated in regions of the country that experienced the most serious distress in real estate markets and the largest declines in economic activity. Although most legal restrictions on branch banking were eliminated in the 1990s, the authors find that many banks continue to operate in a small number of markets and are vulnerable to localized economic shocks. (JEL E32, G21, G28, R11) Federal Reserve Bank of St. Louis Review, September/October 2010, 92(5), pp. 395-415. fewer than four banks failed per year. Bank fail- ures were much more common in the 1980s and early 1990s, however, including more than 100 commercial bank failures each year from 1987 to 1992. As percentages of the total number of U.S. banks and volume of bank deposits, the failures of 2007-10 approach the failures of the 1980s and early 1990s (Figures 1 and 2). 2 The bank failures of the 1980s and early 1990s were concentrated in regions of the country that T he financial crisis and recession that began in 2007 brought a sharp increase in the number of failures of banks and other financial firms in the United States. The failures and near-failures of very large financial firms, such as Bear Stearns, Lehman Brothers, and American International Group (AIG), grabbed the headlines. However, 206 fed- erally insured banks (commercial banks, savings banks, and savings and loan associations, here- after “banks”)—or 2.4 percent of all banks in oper- ation on December 31, 2006—failed between January 1, 2007, and March 31, 2010. 1 Failed banks held $373 billion of deposits (6.5 percent of total U.S. bank deposits) as of June 30, 2006; Washington Mutual Bank alone accounted for $211 billion of deposits in failed banks. The recent spike in bank failures followed a period of relative tranquility in the U.S. banking industry. Between 1995 and 2007, on average 1 The 206 failures include only banks that were declared insolvent by their primary regulator and were either liquidated or sold, in whole or in part, to another financial institution by the Federal Deposit Insurance Corporation (FDIC). This total does not include banks, bank holding companies, or other firms that received govern- ment assistance but remained going concerns, such as the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Citigroup, and GMAC. 2 Figures 1 and 2 include data for both commercial banks and savings institutions but exclude another 747 savings institutions (with $394 billion of total assets) that were resolved by The Benefits and Costs of U.S Environmental Laws The Benefits and Costs of U.S Environmental Laws By: OpenStaxCollege Government economists have estimated that U.S firms may pay more than $200 billion per year to comply with federal environmental laws That is big bucks Is the money well spent? Benefits and Costs of Clean Air and Clean Water The benefits of a cleaner environment can be divided into four areas: (1) people may stay healthier and live longer; (2) certain industries that rely on clean air and water, such as farming, fishing, and tourism, may benefit; (3) property values may be higher; and (4) people may simply enjoy a cleaner environment in a way that does not need to involve a market transaction Some of these benefits, such as gains to tourism or farming, are relatively easy to value in economic terms It is harder to assign a monetary value to others, such as the value of clean air for someone with asthma It seems impossible to put a clear-cut monetary value on still others, such as the satisfaction you might feel from knowing that the air is clear over the Grand Canyon, even if you have never visited the Grand Canyon Although estimates of environmental benefits are not precise, they can still be revealing For example, a study by the Environmental Protection Agency looked at the costs and benefits of the Clean Air Act from 1970 to 1990 It found that total costs over that time period were roughly $500 billion—a huge amount However, it also found that a middle-range estimate of the health and other benefits from cleaner air was $22 trillion—about 44 times higher than the costs A more recent study by the EPA estimated that the environmental benefits to Americans from the Clean Air Act will exceed their costs by a margin of four to one The EPA estimated that “in 2010 the benefits of Clean Air Act programs will total about $110 billion This estimate represents the value of avoiding increases in illness and premature death which would have prevailed.” Saying that overall benefits of environmental regulation have exceeded costs in the past, however, is very different from saying that every environmental regulation makes sense For example, studies suggest that when breaking down emission reductions by type of contaminants, the benefits of air pollution control outweigh the 1/8 The Benefits and Costs of U.S Environmental Laws costs primarily for particulates and lead, but when looking at other air pollutants, the costs of reducing them may be comparable to or greater than the benefits Just because some environmental regulations have had benefits much higher than costs does not prove that every individual regulation is a sensible idea Ecotourism: Making Environmentalism Pay The definition of ecotourism is a little vague Does it mean sleeping on the ground, eating roots, and getting close to wild animals? Does it mean flying in a helicopter to shoot anesthetic darts at African wildlife? Or a little of both? The definition may be fuzzy, but tourists who hope to appreciate the ecology of their destination—“eco tourists”—are the impetus to a big and growing business The International Ecotourism Society estimates that international tourists interested in seeing nature or wildlife will take 1.56 billion trips by 2020 Visit The International Ecotourism Society’s website to learn more about The International Ecotourism Society, its programs, and tourism’s role in sustainable community development Realizing the attraction of ecotourism, the residents of low-income countries may come to see that preserving wildlife habitats is more lucrative than, say, cutting down forests or grazing livestock to survive In South Africa, Namibia, and Zimbabwe, for example, a substantial expansion of both rhinoceros and elephant populations is broadly credited to ecotourism, which has given local communities an economic interest in protecting them Some of the leading ecotourism destinations include: Costa Rica and Panama in Central America; the Caribbean; Malaysia, and other South Pacific destinations; New Zealand; the Serengeti in Tanzania; the Amazon rain forests; and the Galapagos Islands In many of these countries and regions, governments have enacted policies whereby revenues from ecotourism are shared with local communities, to give people in those local communities a kind of property right that encourages them to conserve their local environment Ecotourism needs careful management, so that the combination of eager tourists and local entrepreneurs does not destroy what the visitors are coming to see But whatever one’s qualms are about certain kinds of ecotourism—such as the occasional practice of rich tourists shooting elderly lions with high-powered rifles—it is worth remembering 2/8 The Benefits and Costs of U.S Environmental Laws that the alternative is often that low-income people in poor countries will damage their local environment in their effort to survive Marginal Benefits and Marginal Costs We can use the tools of ... The Benefits and Costs of the Clean Air Act from 1990 to 2020 Final Report U.S. Environmental Protection Agency Office of Air and Radiation March 2011 The Benefits and Costs of the Clean Air Act fron 1990 to 2020 ABSTRACT Section 812 of the 1990 Clean Air Act Amendments requires the U.S. Environmental Protection Agency to develop periodic reports that estimate the benefits and costs of the Clean Air Act. The main goal of these reports is to provide Congress and the public with comprehensive, up-to-date, peer-reviewed information on the Clean Air Act’s social benefits and costs, including improvements in human health, welfare, and ecological resources, as well as the impact of the Act’s provisions on the US economy. This report is the third in the Section 812 series, and is the result of EPA’s Second Prospective analysis of the 1990 Amendments. The Clean Air Act Amendments (CAAA) of 1990 augmented the significant progress made in improving the nation's air quality through the original Clean Air Act of 1970 and its 1977 amendments. The amendments built off the existing structure of the original Clean Air Act, but went beyond those requirements to tighten and clarify implementation goals and timing, increase the stringency of some federal requirements, revamp the hazardous air pollutant regulatory program, refine and streamline permitting requirements, and introduce new programs for the control of acid rain and stratospheric ozone depleters. The main purpose of this report is to document the costs and benefits of the 1990 CAAA provisions incremental to those costs and benefits achieved from implementing the original 1970 Clean Air Act and the 1977 amendments. The analysis estimates the costs and benefits of reducing emissions of air pollutants by comparing a "with-CAAA" scenario that reflects expected or likely future measures implemented under the CAAA with a “without-CAAA” scenario that freezes the scope and stringency of emissions controls at the levels that existed prior to implementing the CAAA. There are six basic steps undertaken to complete this analysis: 1. air pollutant emissions modeling; 2. compliance cost estimation; 3. ambient air quality modeling; 4. health and environmental effects estimation; 5. economic valuation of these effects; and 6. results aggregation and uncertainty characterization. The results of our analysis, summarized in the table below, make it abundantly clear that the benefits of the CAAA exceed its costs by a wide margin, making the CAAA a very good investment for the nation. We estimate that the annual dollar value of benefits of air quality improvements will be very large, and will grow over time as emissions control programs take their full effect, reaching a level of approximately $2.0 trillion in 2020. These benefits will be achieved as a result of February 2003 ANALYSIS WITHOUT COMPROMISE Technology Evaluation and Comparison Report www.butlergroup.com Network Security The Benefits and Pitfalls of Contemporary Network Security Technologies [...]... No Yes No Yes Extensive Microsoft flavours only Extensive Microsoft flavours only Modular roll-out Yes Yes Yes Yes Remote device compliance monitoring (i.e remote users) Yes Yes Yes Yes Configurable user alerts Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Platforms supported Event log storage Real-time 24x7 research facilities Certification ICSA Network Security Sophos Plc – Sophos... Automated response Escalation procedures Network Associates – McAfee Active Virus Defence Yes, good Yes, good © Butler Direct Limited February 2003 Sophos Plc – Symantec Sophos Anti-Virus, Corporation – MailMonitor, & Symantec AntiVirus Enterprise Enterprise Edition Manager 8.5 Computer Associates – eTrust Antivirus 6.0 Yes, high quality Yes Yes Yes Yes Potential number of users Not specified 250,000 Not... Anti-Virus; MailMonitor; Enterprise Manager 11 www.butlergroup.com Headquarters: Europa House, 184 Ferensway, Hull, East Yorkshire, HU1 3UT, UK Tel: +44 (0)1482 586149 Fax: +44 (0)1482 323577 Australian Sales Office: Butler Direct Pty Limited, Level 6, 275 Alfred Street, North Sydney, NSW, 2060, Australia Tel: +61 (0)2 9955 6249 Fax: +61 (0)2 9955 5883 A N A LY S I S W I T H O U T C O M P R O M I S E Financial Institutions Center The Exchange Rate Exposure of U.S. and Japanese Banking Institutions by Sandra Chamberlain John S. Howe Helen Popper 96-55 THE WHARTON FINANCIAL INSTITUTIONS CENTER The Wharton Financial Institutions Center provides a multi-disciplinary research approach to the problems and opportunities facing the financial services industry in its search for competitive excellence. The Center's research focuses on the issues related to managing risk at the firm level as well as ways to improve productivity and performance. The Center fosters the development of a community of faculty, visiting scholars and Ph.D. candidates whose research interests complement and support the mission of the Center. The Center works closely with industry executives and practitioners to ensure that its research is informed by the operating realities and competitive demands facing industry participants as they pursue competitive excellence. Copies of the working papers summarized here are available from the Center. If you would like to learn more about the Center or become a member of our research community, please let us know of your interest. Anthony M. Santomero Director The Working Paper Series is made possible by a generous grant from the Alfred P. Sloan Foundation Sandra Chamberlain is at the Department of Accounting, Santa Clara University. John S. Howe is at the Department of Finance, University of Missouri, Columbia. Helen Popper is at the Department of Economics, Santa Clara University. This paper was presented at the Wharton Financial Institutions Center's conference on Risk Management in Banking, October 13-15, 1996. The Exchange Rate Exposure of U.S. and Japanese Banking Institutions 1 First Version: July 1996 Abstract: In this paper, we examine the foreign exchange exposure of a sample of U. S. and Japanese banking firms. Using daily data, we construct estimates of the exchange rate sensitivity of the equity returns of the U.S. bank holding companies and compare them to those of the Japanese banks. We find that the stock returns of a significant fraction of the U. S. companies move with the exchange rate, while few of the Japanese returns that we observe do so. We next examine more closely the sensitivity of the U.S. firms by linking the U.S. estimates cross-sectionally to accounting-based measures of currency risk. We suggest that the sensitivity estimates can provide a benchmark for assessing the adequacy of existing accounting measures of currency risk. Benchmarked in this way, the reported measures that we examine appear to provide a significant, though only partial, picture of the exchange rate exposure of U. S. banking institutions. The cross-sectional evidence is also consistent with the use of foreign exchange contracts for the purpose of hedging. JEL Classification: F31, F23, G21, G28 Keywords: Foreign Exchange Risk, Banking, Market Risk The Exchange Rate Exposure of U. S. and Japanese Banking Institutions’ 1. Introduction This paper studies the exchange rate exposure of firms in the banking industry. Like many firms, banks can be affected by exchange rate fluctuations. Exchange rates affect most directly those banks with Honors Thesis An Analysis on the Advantages and Disadvantages of u.s Generally Accepted Accounting Principles (GAAP) Converging to International Financial Reporting Standards (IFRSl Thesis Director: Jennifer Cainas Committee Member: Joni Jones Ambily Joseph ambily@mail.usf.edu 04/22/2013 Abstract The US Financial Accounting Standards Board (FASB) and the International Board (IASB) are working on joint projects designed to improve and ultimately Accepted Accounting Principles (US GAAP) to International Accounting Standards converge US Generally Financial Reporting Standards (IFRS) The purpose of the convergence effort is to help improve financial reporting information while also working toward the goal of one set of global accounting standards The convergence effort is a significant move toward achieving a common accounting framework and an important step in the globalization of business However, the convergence is also a time consuming and costly effort This research project primarily deals with an analysis on the advantages and disadvantages of US GAAP's convergence to IFRSand also whether or not the United States will actually go through with the convergence project and adopt IFRS.The hypothesis is that there will be several advantages as well as disadvantages of the convergence effort and even though one set of global accounting standards sound like an ideal solution for the continuously globalizing business world, it will not be put into practice in the United States anytime in the near future Evidence was gathered through extensive research on publications related to the topic and through informal interviews of academics and professionals that study the convergence effort Though the convergence project seems more advantageous practical application of IFRSworldwide in theory, the still remains as a question that can only be answered in due time Table of Contents Abstract Table of Contents History of the Convergence Effort General Differences between the US GAAP and IFRS Current Status of the Convergence Effort 10 Advantages and Disadvantages of the Convergence Effort 14 Conclusion 18 References 19 History of the Convergence Effort The idea for an international convergence of accounting standards first arose in the late 1950s in response to the post World War II economic integration transactions and related increases in cross-border ("A Brief History") "The 1950s began a period of rapid growth of international foreign direct investment, trade and and companies began to expand their reach beyond their borders" (Zeff 808) With each country having its own proper accounting practice or Generally Accepted Accounting Principles (GAAP, as known in the U.S], meaningful comparisons of financial statements from one country to the next was very challenging (Zeff 808) Initial efforts were focused more on reducing the differences among the accounting principles used in major capital markets around the world but by the 1990s, the concept of convergence came about The notion of convergence calls for the development a single set of international of accounting standards that would be used in at least all of the major capital markets around the world ("A Brief History") In 1962, the American Institute of Certified Public Accountants International Congress of Accountants The topic revolved around the world economy in relation to accounting and many participants international (AICPA) hosted the 8th saw the need for the development basis In reaction, the AICPA reactivated its Committee goal of establishing programs to improve the international exchange of information of accounting standards on an on International cooperation Relations with the among accountants and the and ideas that might lead to eventual agreement on common standards ("A Brief History") In 1973, the first international Committee standards-setting body, the International (IASC), was established by the AICPA and its counterparts was to formulate Accounting Standards in other .. .The Benefits and Costs of U.S Environmental Laws costs primarily for particulates and lead, but when looking at other air pollutants, the costs of reducing them may be comparable... Benefits and Marginal Costs We can use the tools of marginal analysis to illustrate the marginal costs and the marginal benefits of reducing pollution [link] illustrates a theoretical model of. .. 1300 MG 500 1850 7/8 The Benefits and Costs of U.S Environmental Laws MG TC TB 1200 2000 Using the information in [link] calculate the marginal costs and marginal benefits of reducing sewage emissions