Current methods of failed bank resolution are unnecessarily expensive for taxpayers and impose substantial costs on borrowers at failed banks. This situation is the result of distorted incentives imbedded in the standard contract between the government and acquirers of failed banks, which result...

Current methods of failed bank resolution are unnecessarily expensive for taxpayers and impose substantial costs on borrowers at failed banks. This situation is due to distorted incentives imbedded in the standard contract between the government and acquirers of failed banks, which result in...

Loan syndication, where a group of banks makes a loan jointly to a single borrower, offers several benefits. Syndication allows banks to diversify, expanding their lending to broader geographic areas and industries. Second, syndication allows banks that are constrained by their capital-asset...

Mutual funds are now the preferred way for individual investors and many institutions to participate in capital markets, and their popularity has increased demand for evaluations of fund performance. Many business publications now rank mutual funds according to their performance, and information...

Swap contracts have grown tremendously in the last decade. Most are interest-rate swaps, the simplest being an exchange of one party’s fixed-rate interest payments for another’s floating-rate payments. Swaps can lower borrowing costs for both parties as well as provide a tool for managing...

New England banks are currently suffering from problems similar to those that caused the demise of many Texas banks. In both cases, a boom in the real-estate sector was followed by a sharp contraction caused by weakness in the leading sectors of the economy. In both cases, banks had greatly...

In the aftermath of the real estate slump and the attendant financial troubles of the New England banks, it is natural to look for causes and contributing factors. One phenomenon that has received its share of the blame is the rush of conversions by thrifts in the mid 1980s from mutual to stock...