Katerina Simons

Reverse Mortgages and the Liquidity of Housing Wealth

The article is organized as follows: Section I briefly describes the features of various types of reverse mortgages offered in the private and public sectors. Section II surveys the ~elevant literature that has focused on the savings patterns of the elderly and their demand for reverse mortgage products. Section III describes the sample of the elderly drawn from the Survey of Income and Program Participation (SIPP). Section IV analyzes the potential demand for reverse mortgages on the basis of age, fertility history, income, housing wealth, liquid wealth, and debt. Section V discusses the difficulties in developing an established market for reverse mortgages, including legal and regulatory barriers, as well as issues of appropriate pricing and risk. Section VI concludes the paper.

Interest rate derivatives and asset-liability management by commercial banks

Bank participation in derivative markets has risen sharply in recent years. The total amount of interest rate, currency, commodity, and equity contracts at U.S. commercial and savings banks soared from

Failed Bank Resolution and the Collateral Crunch: The Advantages of Adopting Transferable Puts

6.8 trillion in 1990 to

Why do banks syndicate loans

11.9 trillion in 1993, an increase of 75 percent. A major concern facing policymakers and bank regulators today is the possibility that the rising use of derivatives has increased the riskiness of individual banks and of the banking system as a whole.> This study uses quarterly Call Report data to shed some light on the pattern of derivative use by U.S. commercial banks. It finds that among banks with assets of less than

Has antitrust policy in banking become obsolete

5 billion, larger banks tend to use interest rate swaps more intensively, while no clear relationship was found between size of bank and other interest rate derivatives. In addition, the study found that for banks with more than

Do capital markets predict problems in large commercial banks

5 billion in assets, those with weaker asset quality tend to be more intensive users of derivatives than banks with better asset quality. However, the author points out that these results, while intriguing, do not give a clear indication of how derivatives are used to manage interest rate risk, or whether they are used to increase or reduce that risk.

Value at risk - new approaches to risk management

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 more loan foreclosures than if the loan were held by a well-capitalized bank. This paper proposes a modification to the standard contract in the form of a transferable put, which would introduce market-based incentives to the disposition of failed bank assets.