Some Shortsighted Bankers Persist in Playing Deadly Game of 'Chicken.' (Asset-Liability Review)

Baker, James V., Jr., American Banker

Less than a decade ago, asset-liability management did not exist as a subject of importance for senior bank managers. Elements of it were being practiced by a few individuals at various banks, but the extant banking literature was devoid of any articles or books on the subject and its fundamental principles.

In a very real sense, the evolutionary nature of asset-liability management began slowly and gained momentum after the October 1979 Federal Reserve massacre when it was decided to focus on the monetary aggregates and allow interest rates to seek their own level. Further impetus was provided by the move to deregulate interest rates plus on deposits.

Until the latter part of 1979, bank managements generally viewed credit and liquidity risks as the dominant risks they faced in banking. Events from late 1979 to 1982 convinced them that the time had …

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Publication information: Article title: Some Shortsighted Bankers Persist in Playing Deadly Game of 'Chicken.' (Asset-Liability Review). Contributors: Baker, James V., Jr. - Author. Magazine title: American Banker. Volume: 149. Publication date: February 14, 1984. Page number: 26+. © 2009 SourceMedia, Inc. COPYRIGHT 1984 Gale Group.

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