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Conflict of Rating Agencies & Regulation; Q: Nobel Laureate

London, UK - 27 August 2007, 09:54 GMT

Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

We are grateful to:

* Prof Charles Calomiris, Columbia Business School, New York & Prof Joseph Mason, LeBow College of Business, Drexel University, Philadelphia, USA for "The Conflict of Rating Agencies and Regulation - We need a Better Way to Judge Risk" in response to the ATCA QUERY: Role of Credit Rating Agencies;

. Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for, "Questioning the Views of a Nobel Laureate" in response to Prof Joseph Stiglitz's submission to ATCA, "Day of Reckoning for Americans who lived Beyond their Means."

Dear DK and Colleagues

Re: The Conflict of Rating Agencies and Regulation - We need a Better Way to Judge Risk

Recent downgrades on Residential Mortgage-Backed Securities (RMBS) and Collateralised Debt Obligations (CDO), and subsequent hedge fund failures and market turmoil, have led many to blame ratings agencies for the mortgage mess. Both the European Commission and Barney Frank, Chairman of the House financial services committee in the US, promise hearings into the culpability of ratings agencies.

[CONTINUES] [ATCA Membership]

Best


Charles Calomiris & Joseph Mason

Prof Charles Calomiris is the Henry Kaufman Professor of Financial Institutions at the Columbia University Graduate School of Business and a Professor at Columbia's School of International and Public Affairs. He is one of America's leading authorities on financial institutions. His research spans the areas of banking, corporate finance, financial history and monetary economics. He has advised numerous firms, agencies and governments on the performance and regulation of financial institutions. He co-directs the Project on Financial De/Regulation at the American Enterprise Institute (AEI) and is the Arthur Burns Scholar in International Economics at AEI. He is a member of the Shadow Financial Regulatory Committee, a Research Associate of the National Bureau of Economic Research, and was a Senior Fellow at the Council on Foreign Relations. He teaches international banking and a case course on business and finance in emerging market economies. He is Chairman of the Board of Greater Atlantic Financial Corporation, a publicly traded bank based in the Washington, DC, metropolitan area, and a Managing Partner of Gauss Fund, LP. He served on the International Financial Institution Advisory Commission, a Congressional commission to advise the US government on the reform of the IMF, the World Bank, the regional development banks, and the WTO. His research spans several areas, including banking, corporate finance, financial history, and monetary economics.

Prof Calomiris is the recipient of research grants or awards from the National Science Foundation, the World Bank, the Japanese Government, the Herbert V Prochnow Foundation, and the Garn Institute of Finance. In 1995, he was named a University Scholar at the University of Illinois, where he served as Associate Professor of Finance and Co-Director of the Office for Banking Research. He is a member of the editorial boards of the Journal of Banking and Finance, the Journal of Financial Services Research, the Journal of Financial Intermediation, the Journal of Economic History, the Journal of Economics and Business, and Explorations in Economic History. He serves or has served as a consultant or visiting scholar for the Federal Reserve Banks of New York, Chicago, Cleveland, and St. Louis, the Federal Reserve Board, the World Bank, and the governments of Mexico, Argentina, Japan, China, El Salvador, Connecticut and Massachusetts. His private sector clients have included Bank of America, Citicorp, Fenwick & West, Fleet, LeBoeuf Lamb, The Limited, Lloyds, Mayer Brown, Milbank Tweed, UBS Securities, US Trust Corporation, and Wachtel Lipton. He also teaches international banking and advanced corporate finance at the MBA and PhD levels at Columbia, as well as the MBA core course in Business Values and Ethics. He teaches PhD-level courses at the World Bank and the IMF, including a course at the IMF on Emerging Financial Markets for the past three years. He earned a PhD in economics from Stanford University and a BA in economics, magna cum laude, from Yale University.

Prof Mason is an Associate Professor of Finance at Drexel University's LeBow College of Business, a Fellow at the Wharton School, and a Visiting Scholar at the Federal Deposit Insurance Corporation. Professor Mason teaches in the areas of corporate finance, financial markets and institutions, and risk management and derivatives. He teaches the writing intensive course in Money and Banking and is a founding member of Drexel's Writing Intensive Curriculum Implementation Group. Prior to joining Drexel University, he was a financial economist with the Office of the Comptroller of the Currency and Adjunct Assistant Professor of Finance at Georgetown University School of Business. His research spans the fields of corporate finance, financial intermediation, financial history, and monetary economics, focusing on issues related to both theory and public policy. He is the recipient of research grants or awards from the National Science Foundation, the Federal Reserve Bank of St Louis, Drexel University, and the University of Illinois. He serves or has served as advisor and consultant to many agencies and firms, including the Federal Deposit Insurance Corporation, the Federal Reserve Bank of Philadelphia, The Conference Board, the G-30, the World Bank Group, and numerous private firms. He is a member of the American Finance Association, the Financial Management Association, the Cliometrics Society, the Economic History Association, Beta Gamma Sigma, and Omicron Delta Epsilon.

Prof Mason has published academic articles in the American Economic Review; Journal of Business; Journal of Money, Credit, and Banking; Journal of Banking and Finance; Pacific-Basin Finance Journal; Journal of Financial Services Research; Research in Banking and Finance; and Explorations in Economic History, and book chapters in Resolution of Financial Distress (World Bank Group, Stijn Claessens, et al, eds); Privatization, Corporate Governance and Transition Economies in East Asia (NBER, Takatoshi Ito and Anne Krueger, eds); and Too-Big-To Fail: Policies and Practices in Government Bailouts (Greenwood Publishing, Benton E Gup ed). Dr Mason's current research projects include investigating the micro and macroeconomic effects of bankruptcy and liquidation procedures; the incidence and cost of systemic risk; and the management of idiosyncratic risks posed by new forms of bank lending, asset-backed securities, collateralized debt obligations (CDOs) and securitization. His work has been cited or published in the New York Times, Washington Times, the Economist, Wall Street Journal, Associated Press, Reuters, Bloomberg, KnightRidder Syndicate, MarketWatch-Dow Jones Newswire, MIST News, Financial Times, Barrons, Business Week, die Zeit, Investment Dealers Digest, American Banker, BNA's Banking News, Realty Times, Toronto Globe & Mail, the Philadelphia Business Review, and on CNBC, NBC Nightly News. He has made numerous live appearances on CNBC, Bloomberg Television, Comcast CN8 News, WBBM Radio Chicago, WHYY Public Radio Philadelphia, and WWDB Talk Radio Philadelphia.
____________________________________________________________________________

Dear DK and Colleagues

Re: Questioning the Views of a Nobel Laureate

I am astonished to be writing to contradict the views of so distinguished an economist as Prof Joseph Stiglitz.

[CONTINUES] [ATCA Membership]

Regards


George Feiger

Dr George Feiger is President and CEO of Contango Capital Advisors, based in Berkeley, California. He brings to the firm a diverse background in the banking, financial services and wealth-management industries. He is also Executive Vice President of the firm's parent company, Zions Bancorporation listed on Nasdaq and based in Salt Lake City, Utah. Prior to Contango, Dr Feiger served in a number of senior positions in the financial services sector. He was a Senior Advisor to the Monitor Group, Global Head of Onshore Private Banking for UBS, Global Head of Investment Banking at SBC Warburg and was a Senior Partner at McKinsey & Co during his time in Europe. He led the merger integration of the corporate finance businesses of Swiss Bank Corp and SG Warburg, and oversaw the consolidation of SBC Warburg's sales and trading businesses. He was also a partner at Capco, a financial services consulting firm. He holds a PhD in Economics from Harvard University and was an Associate Professor of Finance at Stanford University's Graduate School of Business. He has served as a director on several corporate boards and is a frequent writer and speaker on a wide range of financial topics.

[ENDS]

We are grateful to:

* Prof Charles Calomiris, Columbia Business School, New York & Prof Joseph Mason, LeBow College of Business, Drexel University, Philadelphia, USA for "The Conflict of Rating Agencies and Regulation - We need a Better Way to Judge Risk;"

. Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for, "Questioning the Views of a Nobel Laureate;"
. Prof Joseph Stiglitz, Nobel Laureate in Economics (2001), Columbia University, New York, USA , for "Day of Reckoning for Americans who lived Beyond their Means;"
. Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for "Suggestions for Resolving Sub-Prime Dilemma Step by Step;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Understanding Rating Agencies beyond the Sub-Prime Meltdown;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Knowledge Risk and Market Deadlock;"
* Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "High Credit Ratings and Breakdown of Trust;"
* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based in London and Tunbridge Wells, UK, for "Role of Auditors;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "ATCA QUERY: Role of Credit Rating Agencies;"
. Peter Tasker, Founding Partner, Arcus Investment, based in Tokyo, Japan, for "Resilience of Corporate Profits & Sub-Prime Fiasco -- Global View from Japan;"
. Daniel Morler, Head of Middle East, LGT Private Bank, based in Vaduz, Liechtenstein, for "Human Factor, Information Lag, Geo-Politics and Central Banks;"

. Justin Urquhart Stewart, Director, Seven Investment Management, London, UK, for "Pride Before the Fall -- Those Who Don't Know that they Don't Know;"
. Martin Wolf, Associate Editor & Chief Economics Commentator, Financial Times, London, UK, for "To Cut or Not to Cut: Federal Reserve must Prolong the Party;"
. The Hon Al McDonald, Chairman and CEO, Avenir Group, from Michigan, USA, for "Balancing The Role of Management in Extreme Financial Turbulence."
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Subprime Crisis Spreads Across Regions and Financial Sectors;"
* Hervé de Carmoy, European Vice-Chairman, Trilateral Commission, based in Paris, France, for "Role of Large Financial Institutions in Fuelling Crisis;"
* Dr Jim Walker, Chief Economist, CLSA, based in Hong Kong for "China Chaos and Subprime Butterfly;"
. Ashutosh Sheshabalaya, CEO, India-Advisory, based in Brussels, EU, and Bassilly, Belgium, for "India turns History Upside Down;"
. John Elkington, Chief Entrepreneur, SustainAbility, based in London, UK, and returning from India, for "Mother Convulsion - India's Third Liberation;"
. Stephen Lendman, based in Chicago, Illinois, USA, for "Slow Motion Train Wreck" via Ashok Khosla, Chairman, Development Alternatives, New Delhi, India;
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Market Convulsions;"

. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Federal Reserve's Changed Focus;"
. Bill Emmott, Director, UK-Japan 21st Century Group, based in London and Somerset, UK, for "Japan's Strong Yen;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "The Asymmetric Loss of Trust and Chain Reaction;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Public Inquisition of Credit Rating Agencies may Accelerate Downturn;"
. Dr George Feiger, President and CEO, Contango Capital Advisors, based in Berkeley, California, USA, for "Watch out for Dramatic Winners;"
* The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Systemic Risk & Sectoral Meltdown: Heightened Correlation and Deleveraging;"
. Rudi Bogni, Chairman, Medinvest, and Director, Old Mutual, from Basel, Switzerland, for, "Non-Stop Central Banks' Intervention;"
. Dr Ravi Batra, Professor of Economics, Southern Methodist University, Dallas, Texas, USA, for, "Towards a Global Economic Crisis?;"
. Aurora Carlson, Founder, Open One Center, based on the West Coast, Sweden, for "The Coming Storm of Change;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Large Quake hits Quants as Computer-Driven Quantitative Hedge Funds Short-Circuit;"

* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Prolonged Credit Market Correction Ahead;"
. Prof Dr Norbert Walter, Chief Economist, Deutsche Bank Group, based in Frankfurt, Germany, for "Economic Consequences of The Sub-Prime Crisis;"
. Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "Regulators, Hedge Fund Lending and Cross-Selling;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Perfect Storm: Credit Freeze and Distress Selling by Hedge Funds;"
. Dr George Feiger, based in Berkeley, California, USA, for "Two Faces of the Same Coin;"
* The ATCA Editorial Team, based in Canary Wharf, London, for "Contagion and Systemic Risk? ECB Injects Record Euro 95bn post Major Disturbance;"
. The ATCA Editorial Team, for "Flight to Quality as Markets finally Appreciate Risk;"
. Robert McNally, Chairman, London Chamber of Commerce Property and Construction Group, for "Erosion of Commercial Real Estate as a Solid Asset Class;"
. Alexander Hoare, CEO, C Hoare and Co, Private Bankers, based in the City of London, for "Destructive Creativity, Leverage and The Derivatives Market;" and
. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, for "The Fear of Central Bankers -- Flight from Illiquidity, Derivatives and Heightened Risk of Contagion;"

in response to, "Are the Currency Markets Warning that there is Trouble Ahead? The Precipitous Decline of the US Dollar and its Impact on the World."

* Denotes ATCA QUERY: Role of Credit Rating Agencies

We look forward to your further thoughts, observations and views. Thank you.

Best wishes


For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)


ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. Please do not forward or use the material circulated without permission and full attribution.



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