David K.A. Mordecai was invited to participate in the Federal Reserve Bank of Richmond 2007 Credit Markets Symposium. David Mordecai joined a panel discussing Liquidity Risk in Credit Markets. The panel was moderated by Jeffrey Lacker, President of the Federal Reserve Bank of Richmond, and the other panelists were Jaime Caruana, International Monetary Fund (IMF) and Samuel Cole, Blue Mountain Capital Management. The symposium was held on March 23, 2007 at the Richmond, VA office of the Federal Reserve Bank of Richmond.
The symposium began with a market overview by two leading rating agencies on the credit derivatives and leveraged loan markets. A keynote speech by Governor Randall Kroszner discussed recent innovations and developments in the credit markets, which led into the first session about the economic impact of innovations in the credit markets. A panel of market participants discussed the effectiveness of credit risk markets in allocating risk. Another panel considered liquidity risk in the credit markets, which provided a segway into private-sector responses to potential market disruptions. The Federal Reserve Bank of New York President Timothy Geithner provided a closing keynote address including a compelling dialogue about the implications of recent credit markets innovations with Federal Reserve Bank of Richmond President Jeffrey Lacker.
The symposium was particularly timely considering recent events in the credit markets including the explosion of the leveraged loan market, and sub-prime mortgage market events. The discussions covered financial innovations including credit derivatives, the leveraged loan market, credit swaps, collateralized debt obligations, securitizations, structured credit products and contract structure; investment and risk management including loan hedging in a fair value option framework, credit risk management, credit portfolio management, sourcing and mitigation credit risk, bank balance sheet management, investment management; market structure, liquidity risk, and potential responses to market disruptions.