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Sifma Addressing Financial Crisis Behind the Scenes
CEO Ryan says organization is tackling securitized and structured products
June 16, 2008
The Securities Industry & Financial Markets Association (Sifma) is actively responding to the current market problems, says Timothy Ryan, the organization's president and CEO. But for now it is doing so out of sight of the media, working with regulators and legislators and with other financial services associations in the U.S. and Europe.
"The fact that we are not running conferences or putting out press releases should not hide the fact we are fully engaged on all of these issues," Ryan tells Securities Industry News. "And we are not the only ones doing it--in the U.S. and London the trade groups all represent the same 25 to 50 companies on the sell side and buy side who are the global leaders. We all talk to each other at a very senior level, and we are doing a lot."
According to Ryan, who in April became head of Sifma, succeeding Marc Lackritz, the biggest task facing trade groups is developing and delivering useful content to decisionmakers in government and business. "Congress, Treasury and the Fed are all looking for information," he notes. "Many of the people in influential positions are people I have known in one way or another for years, going back to the three years working 24-7 on the S&L cleanup. When they call and ask if I can help with a problem, they know I have been there."
"These are smart people, and they need substantive input," continues Ryan. "We present what we believe is the industry's best view of today's circumstances, what we think should be done, what we think shouldn't be done, and three other alternatives along with their pros and cons for issuers, investors and the general public. Then it is up to them to decide."
Before joining Sifma, Ryan was vice chairman of investment banking for financial institutions and governments at JP Morgan Chase & Co. and a member of its investment banking coverage management committee. "I wasn't sitting on a desk trading derivatives," he says, "but I know how it works. And I understand the profitability and the risks."
Previously, he spent three years as director of the Treasury Department's office of thrift supervision, overseeing 3,000 employees in 11 offices around the nation dealing with approximately 2,000 thrifts during the savings and loan crisis. That experience taught him a good deal about the way Washington works, and led to relationships that are valued today.
Currently, one of the leading issues Sifma is tackling is securitized and structured products and their link to credit agency reform. "We have set up industry-led task forces to address both of those issues and we are sequencing them," explains Ryan. "We hope to come up with an answer on credit rating agency reform by midsummer and then link that into our views on what we need to do with asset-backed securities and structured products" in areas such as transparency and valuation.
Assuring Investors
"We are looking for the best way to assure future investors that, when they put their money in a security or commercial paper backed by a complex structured product, everyone--investors and credit rating agencies--has the information they need to understand the basis of a particular rating and make a credit assessment," he says. "This is going to require transparency down to the asset level, which is a pretty major change in the way business is done." That committee includes about 30 people and is working with governments on both sides of the Atlantic and the credit rating agencies.
