Summary
To effectively administer a community bank's investment portfolio, the broader objectives of the institution's overall asset/liability management strategy should be taken into account. In addition to giving due consideration to these bank-specific factors, it is important for bank portfolio managers to have a clear understanding of the macroeconomic and interest-rate environment. As the massive credit bubble rapidly unraveled, asset values plummeted, credit markets collapsed and the economy contracted. The economy entered the new year with considerable downward momentum, one of many formidable challenges confronting policymakers in 2009. The recession is expected to extend into the third quarter of 2009, followed by a period of anemic growth that will likely extend well into 2010. A formidable challenge for policymakers will be unwinding the intervention in a timely fashion once the economy is on more solid footing. The FDIC's short-term bank debt guaranty program and the Fed's commercial paper program have been particularly helpful in reducing money market risk premiums.
See the full content of this document
Extract
Developing a Macro Perspective
To effectively administer a commu- nity banks investment portfolio, the broader objectives of the institutions overall asset/liability management strategy should be taken into account. In addition to giving due consideration to these bank-specific factors, it is important for bank portfolio managers to have a clear understanding of the macroeconomi...
See the full content of this document
Sponsored links
