Ep. 7: The Federal Reserve’s $700 Billion Commercial Paper Bailout with Linus Wilson on the Finance Professor Podcast

Merry X-mas everybody! Linus Wilson reads his joint work with Wendy Yan Wu of Wilfrid Laurier University and updates the plans for the 2018 for the The Finance Professor Podcast.

 

Does Receiving TARP Funds Make it Easier to Roll Your Commercial Paper Onto the Fed?

32 Pages Posted: 17 Aug 2011 Last revised: 24 Aug 2011

Linus Wilson

University of Louisiana at Lafayette – College of Business Administration

Yan Wendy Wu

Wilfrid Laurier University

Date Written: August 22, 2011

Abstract

The Commercial Paper Funding Facility (CPFF) bought commercial paper from highly-rated issuers of U.S. dollar commercial paper during the financial crisis of 2008 to 2009. This is the only study to analyze the characteristics of firms selected for this Federal Reserve program. CPFF participants and non-participants differed little in terms of profitability, solvency, or liquidity ratios. Nevertheless, CPFF participants were significantly more likely to come from the financial sector, to pose greater systemic risks, and to have received funds from the Troubled Asset Relief Program (TARP) bailout. The baseline predicted probability of participation in the CPFF jumps from 37.2 percent to 65.9 percent if the commercial paper issuer participated in the TARP bailout.

 

Keywords: ABCP, Asset Backed Commercial Paper, bailout, banks, Capital Purchase Program (CPP), commercial paper, Commercial Paper Funding Facility (CPFF), emergency lending, Federal Reserve, multinational firms, section 13(3), Troubled Asset Relief Program (TARP), U.S. Treasury, unsecured commercial paper

JEL Classification: G01, G18, G2, G28

Wilson, Linus and Wu, Yan Wendy, Does Receiving TARP Funds Make it Easier to Roll Your Commercial Paper Onto the Fed? (August 22, 2011). Available at SSRN: https://ssrn.com/abstract=1911454 or http://dx.doi.org/10.2139/ssrn.1911454

 

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https://financeprofessorpodcast.wordpress.com/

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Ep. 6: Andrew Metrick Presents “Managing and Preventing Financial Crises” at the 2017 Financial Management (FMA) Meetings in Boston on the Finance Professor Podcast

Professor Andrew Metrick is the Michael H. Jordan Professor of Finance and Management at the Yale School of Management. He is the director, Yale Program on Financial Stability and the Faculty Director, Masters in Systemic Risk program at Yale. Professor Metrick outlines the responses to the 2008 financial crises in the USA and abroad and speaks about the tension between regulation and shadow banking.

The YouTube version of this talk is on the Linus Wilson channel at

https://www.youtube.com/watch?v=ZyjqU_vEVHs&t=220s

Professor Metrick was an assistant professor in economics at Harvard University and was an assistant and associate professor of finance at the Wharton School of Business at the University of Pennsylvania. He also served as a senior economist and the cheif economist on President Obama’s Council of Economic Advisers while the administration worked on the Dodd–Frank Wall Street Reform and Consumer Protection Act and tried to manage the hugely unpopular bailout of the financial sector, the Troubled Asset Relief Program (TARP). The latter bailout turned a modest profit and many believe it helped to stabilize the financial system.

The Finance Professor Podcast’s facebook page is 

https://www.facebook.com/FinanceProfessorOrg/

Subscriber to the YouTube channel at

https://www.youtube.com/channel/UCYY02-A8UQ6307k8PPDj5hQ?sub_confirmation=1

Check out Dr. Metrick’s CV at
http://faculty.som.yale.edu/andrewmetrick/documents/cv.pdf

The Financial Management Association 2017 program from its Boston meeting is at
http://fmaconferences.org/Boston/BostonProgram.htm


This was session 214 at the Marriot Copley Place.
#FMABoston2017
www.facebook.com/FMA.org

The next meeting is in San Diego.

Dr. Linus Wilson is an associate professor of finance at the University of Louisiana at Lafayette. He has published extensively on the TARP bailout and has studied the bailouts orchestrated by the U.S. Federal Reserve and the FDIC during the financial crisis of 2008. You can see his research at
http://www.linuswilson.com
www.financeprofessor.org

I mentioned the following papers whose working paper versions are at 

Wilson, Linus, Debt Overhang and Bank Bailouts (September 12, 2009). Available at SSRN: https://ssrn.com/abstract=1336288 or http://dx.doi.org/10.2139/ssrn.1336288

Wilson, Linus and Wu, Yan Wendy, Common (Stock) Sense about Risk-Shifting and Bank Bailouts (January 1, 2010). Financial Markets and Portfolio Management, Vol. 24, No. 1, pp. 3-29, 2010. Available at SSRN: https://ssrn.com/abstract=1321666

Wilson, Linus, Broken Bucks: Money Funds that Took Taxpayer Guarantees in 2008 (August 28, 2015). Available at SSRN: https://ssrn.com/abstract=2195358 or http://dx.doi.org/10.2139/ssrn.2195358

Wilson, Linus and Wu, Yan Wendy, ‘Escaping TARP’ (September 21, 2010). Journal of Financial Stability, Vol. 8, No. 1, 2012. Available at SSRN: https://ssrn.com/abstract=1619689 or http://dx.doi.org/10.2139/ssrn.1619689

Wilson, Linus and Wu, Yan Wendy, Does Receiving TARP Funds Make it Easier to Roll Your Commercial Paper Onto the Fed? (August 22, 2011). Available at SSRN: https://ssrn.com/abstract=1911454 or http://dx.doi.org/10.2139/ssrn.1911454

Wilson, Linus, Toxic Asset Subsidies and the Early Redemption of TALF Loans (August 17, 2011). Available at SSRN: https://ssrn.com/abstract=1742640 or http://dx.doi.org/10.2139/ssrn.1742640

Look at Linus Wilson’s CV for the full citation of published papers.

http://nebula.wsimg.com/8f47995b8c3f7bf45dc9bbf4543b4fc9?AccessKeyId=9D13B676921FF385D2F1&disposition=0&alloworigin=1

Professor Linus Wilson is the host of the Finance Professor Podcast at
https://www.stitcher.com/podcast/linus-wilson/the-finance-professor-podcast

https://itunes.apple.com/us/podcast/the-finance-professor-podcast/id1226939293?mt=2

Dr. Jeffry L Coles a Professor of Finance at the David Eccles School of Business at the University of Utah and served as the Vice President of the 2017 Annual Meeting Program.

https://faculty.utah.edu/u0982804-JEFFREY_L._COLES/research/index.hml

Ep. 5: Discrete Portfolio Adjustment with Fixed Transaction Costs on The Finance Professor Podcast

Professor Linus Wilson reads his paper “Discrete Portfolio Adjustment with Fixed Transaction Costs”

Wilson, Linus, Discrete Portfolio Adjustment with Fixed Transaction Costs (January 3, 2016). Available at SSRN: https://ssrn.com/abstract=2406021 or http://dx.doi.org/10.2139/ssrn.2406021

Abstract

This paper presents a closed form solution to the portfolio adjustment problem in discrete time when the investor faces fixed transaction costs. This transaction cost model assumes a mean-variance investor who wants to adjust her holdings of a risky and risk-free asset. It is shown how this model can be calibrated to be used with a variety of risk models such as life cycle portfolio weights and value at risk (VaR) models. The decision problem can easily be inputted into and calculated in Excel.

Keywords: adjustment costs, alpha models, brokerage commissions, fixed costs, lifecycle funds, portfolio selection, portfolio theory, risk management, transaction costs, Value at Risk (VaR)

JEL Classification: G11

Click the orange download button to get the full paper on SSRN.

Ep. 4: Overpaid CEOs Got FDIC Debt Guarantees

Linus Wilson reads his joint work at

https://ssrn.com/abstract=1977345

“Overpaid CEOs Got FDIC Debt Guarantees”

By Linus Wilson, University of Louisiana at Lafayette and Yan Wendy Wu, Wilfrid Laurier University

abstract

From 2008 to 2009, the FDIC guaranteed hundreds of billions of dollars of newly issued bank debt through the Temporary Liquidity Guarantee Program (TLGP). We find that CEOs making more than their peer groups were significantly more likely to steer their companies to obtain federal guarantees for their banks’ debt. The average bank in our sample with a debt guarantee had a CEO who was paid $1.6 million per year more than the average CEO in his or her peer group. In addition, there is strong evidence that large, systemically important banks were more likely to obtain FDIC debt guarantees.

Keywords: bailout, banks, CDS, Citigroup, CEO Compensation, corporate governance, credit default swaps, debt, debt guarantees, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, emergency lending, FDIC, Federal Deposit Insurance Corporation, Federal Reserve, financial crisis, FOIA, Freedom

Get the show notes blog at www.financeprofessor.org and sign up for the free newsletter. There will be links to the facebook page. The podcast is on iTunes

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How to Compare Faculty Pay Across the Business School by Linus Wilson

By scaling pay by AACSB averages pay across business school, disciplines can be analyzed. This is a video of the research paper “How to Compare Faculty Salaries Across the Business School” by Dr. Linus Wilson.

This study looks at a unique data set of business school professors at the University of Louisiana at Lafayette. It finds large disparities in pay between the business disciplines that cannot be explained by the market price of scholars in the disciplines, research productivity, or faculty to major ratios. The finance professors were the lowest paid of six disciplines as a percent of AACSB pay, but had the highest research productivity and majors per research faculty member at the Moody College of Business Administration (MCOBA). Finance professors were paid about 20 percent less as a percent of the AACSB average for their rank and discipline than other research faculty at the MCOBA. Members of the management department were paid significantly higher percent of AACSB average pay than other professors in the business school. This data may be indicative of a misallocation of resources. The approach in this paper could be applied to analyze pay practices at many other business schools and over many other time periods.

Get the full version of the my paper at “How to Compare Faculty Pay Across the Business School

Linus Wilson an associate professor of finance with tenure at the University of Louisiana at Lafayette’s B.I. Moody III College of Business Administration (MCOBA).

Check out The Finance Professor Podcast at iTunes, Stitcher, and Podbean hosted by Linus Wilson.

Check out Linus Wilson’s academic research and CV at
www.financeprofessor.org
www.linuswilson.com

Check out his Social Science Research Network (SSRN) author page.

Most sailing YouTubers make peanuts on The Finance Professor Podcast’s episode 2.

I know everybody knows what a great gig the crew of SV Delos and Sailing La Vagabonde has making weekly videos and sailing around the world. Unfortunately, most of the roughly 400 sailing vlogs on YouTube make next to nothing. Hey, its the movie business! Most actors don’t make as much a Brad Pitt either!
 
Most folks crowdfunding on Patreon make $73 per video or less. On my new podcast, The Finance Professor Podcast, on iTunes (your purple iPhone podcast app), Google Play for Android, Stitcher, and Podbean, I introduce and read my most recent study, “A Little Bit of Money Goes a Long Way: Crowdfunding on Patreon by YouTube Sailing-Channels”. (Hit the orange download button.)
 
Check out the show notes blog here!
 
This probably means that you should not quit your job or business. Instead, think about sailing around the world part-time if you are not ready to retire just yet