Each depositor insured to at least $250,000 per insured bank

Presentation: Risk Management Webinar: Risk Management in a Flat-to-Inverted Yield Curve Scenario

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Transcript: Risk Management Webinar: Risk Management in a Flat-to-Inverted Yield Curve Scenario

For recent FDIC research on the yield curve, see the February 22, 2006, issue of FYI: "What the Yield Curve Does (and Doesn't) Tell Us," at http://www.fdic.gov/bank/analytical/fyi/2006/022206fyi.html.

Partners and Presenters

• Norm Williams, Chief, Economic Analysis, and Ross Waldrop, Senior Financial Analyst, Federal Deposit Insurance Corporation, discussed research done by the FDIC on the current interest rate environment focusing on:
• Theoretical background on interest rates and yield curve dynamics; relationship to economic activity.
• What influences the yield curve's shape, and why does it sometimes invert? A look at recent trends.
• Historical perspectives on flat yield curve impacts on the banking sector:
• Margin compression and implications for asset liability management.
• Liquidity risk and implications for managing cash flows.
• Credit risk and implications on portfolio construction and loan mix.
• Paul Hudson, President and CEO, Broadway Federal Savings Bank, Los Angeles, gave a presentation on interest rate management as it related to pricing of loans and deposits, which led to successful outcomes for the CDBI.
• David Oser, Senior Vice President, ShoreBank Chicago, discussed strategies to manage interest rate risk in the bond portfolio and for asset liability management.
• Saurabh Narain, Chief Fund Advisor, National Community Investment Fund, Chicago, provided some examples of successful (and not so successful) strategies in the above context.