Danger Ahead! Margins Decline while Interest–Rate Risk is on the Rise!
by Frank L. Farone, Managing Director
Darling Consulting Group
As the old saying goes, “The best time to plant a tree was long ago, and the second best time to plant a tree is today.” The same can be said for interest-rate and liquidity risk planning. As falling rates and robust liquidity continue to wreak havoc on nearly all financial institutions, there is no better time than now to put policies and other tools in place to address their potential impact on future earnings.
Mapping Your Way through the Labyrinth of ZIRP and Excessive Liquidity
by John P. Biestman, CFA, Director of Business Development
Federal Home Loan Bank of Seattle
“If something cannot go on forever, it will stop.” -- Herbert Stein, Former Chairman of the Council of Economic Advisers
It’s hard to believe that December 16, 2012, marked the fourth anniversary of the Federal Reserve’s release of its Federal Open Market Committee’s decision to establish a target range for the federal funds rate of 0 to 1/4 percent. Since then, we have seen this policy backed up by aggressive purchases of bonds, treasuries, agencies, and mortgage-backed securities, and its alteration of Treasury holdings (“Operation Twist”).