Monday, June 6, 2011

Professor Anat Admati Named to FDIC Systemic Resolution Advisory Committee

Finance faculty member Anat Admati has been appointed to the FDIC Systemic Resolution Advisory Committee to provide advice and recommendations on a broad range of issues related to Congress' Dodd-Frank Wall Street Reform and Consumer Protection Act.

Anat Admati photoSTANFORD GRADUATE SCHOOL OF BUSINESS -Anat Admati, who is George G.C. Parker Professor of Finance and Economics at the Stanford Graduate School of Business, has been appointed to a two-year term on the newly-formed Systemic Resolution Advisory Committee of the Federal Deposit Insurance Corporation (FDIC), beginning in June 2011.

An independent agency created by Congress to maintain stability and public confidence in the nation's financial system, the FDIC insures deposits in banks and thrift institutions; identifies, monitors and addresses risks to the deposit insurance funds; and limits the effect on the economy and the financial system when a bank or thrift institution fails. 

The FDIC established the System Resolution Advisory Committee to address Dodd-Frank Regulatory Reform Rules in the aftermath of the financial crisis of 2008.  According to the Congressional charter inaugurating the body, “The SR Advisory Committee will provide advice and recommendations on a broad range of issues regarding the resolution of systemically important financial companies?”

Admati recently rallied prominent financial economists to argue that Basel III capital regulation rules are insufficient to prevent future crises, and in fact maintain distortions in the financial system. A paper she coauthored makes the case that dramatically reducing the leverage of financial institutions would generate significant benefits while having minimal, if any, negative consequences for the economy.  

Among the 18 members of the FDIC advisory committee are former Federal Reserve Chairman Paul Volcker, and former Citigroup Chairman and CEO John S. Reed.