Banks’ Exposures To Russia Are Much More Transparent Than Those Of Non-Banks

Banks’ Exposures To Russia Are Much More Transparent Than Those Of Non-Banks

Hundreds of financial institutions are exposed to Russia, but we do not know by how much. Remember Long Term Capital Management and AIG? I sure do. LTCM imploded in 1998, in large part, because of its investments in Russian treasuries and other emerging market securities. In 2008, AIG Russia almost declared bankruptcy because a unit in London, that barely anyone knew about, was selling protection, through credit default swaps, to banks who were protecting against defaults on securitizations. Why does this walk down memory lane matter? Because here we are in 2022, and sadly, we are still in a situation where there is tremendous opacity in the global financial system. If it were just rich investors losing money, the vast amount of the global population would hardly lose sleep. However, when financial institutions lose money, they invariably impact unsuspecting citizens. FRBNY President and my former boss, William McDonough (R), and Federal Reserve Chairman Alan ... [+] Greenspan (L) testified during a hearing on systemic risks to the global economy from hedge fund operations. Multiple international standard setters such as the Financial Stability Board and the Bank for International Settlements have long warned that Other Financial Institutions (OFIs), also known as