1. Financial Crisis and Information Gaps Michael Gibson Federal Reserve Board July 8, 2009

2. This presentation represents the views of the author and should not be interpreted as reflecting the views of the Board of Governors of the Federal Reserve System or other members of its staff.

3. 3 stages of crisis 1.Subprime 2.Liquidity and deleveraging 3.Global shock to confidence

4. Information gaps: where to focus? 1.Subprime 2.Liquidity and deleveraging 3.Global shock to confidence

5. Liquidity and leverage: where were the data gaps? “Shadow banking system” –Maturity transformation and credit-risk-taking off the balance sheets of banks

6. Elements of shadow banking system –ABCP ($1.2 trillion) –Money market mutual funds ($3 trillion) –SIVs ($400 billion) –Repo markets ($5 trillion) –GSEs ($1.7 trillion) –Auction-rate securities ($300 billion)

7. Shadow banking system in stress Maturity mismatch led to runs Some elements disappeared –SIVs –Auction-rate securities Some received extraordinary support –ABCP –MMMF –Repo –GSEs

8. How to close the data gaps? Improve statistics on intermediation outside the banking system –Shadow banking system –Securitization –Hedge funds Goal: track broad trends