consulting services

Our mission in all of our proprietary consulting: to ensure that clients become astute policy risk managers, able to spot emerging risks and capitalize on opportunities, just as effective credit- or market-risk managers do. Federal Financial Analytics serves as our client’s proprietary think-tank – providing advice as an honest broker based on an objective read of the complex financial-industry legislative, regulatory and policy environment to highlight risk, identify opportunity and ensure realistic, forward-looking strategic planning.

Policy risk is the risk that a change in law, rule or, sometimes, even the regulatory mood can affect the prospects for a line of business, a product or service, or even the relative competitiveness of different types of financial-industry charters. Like the other risks financial firms manage, policy risk can be anticipated, analyzed and averted. There’s also a positive side to government risk — often, one firm’s threat is another’s opportunity. Federal Financial Analytics does not itself conduct any lobbying activity. However, it provides analysis and advice for advocacy programs and works closely with the client to achieve the client’s goals.

Federal Financial Analytics’ proprietary advisory services include the following:

  • M&A Advice: Federal Financial Analytics has advised major private-equity firms evaluating financial-industry and bank transactions to ensure the deals anticipate not only traditional financial risk, but also those posed by changing regulatory, legislative and policy developments.  In the wake of the financial crisis, our practice has focused on strategic regulatory initiatives such as new orderly-resolution protocols and bankruptcy resolution, Basel III rules, Dodd-Frank changes (e.g., the Volcker Rule), development of housing finance with the GSEs in conservatorship, insurance industry participation in GSE and bank credit risk mitigation and the intersection of global and U.S. banking standards. We have also counseled major bank holding companies in complex transactions, including innovative new-product lines and hostile takeovers.
  • Strategic Risk Management: As the Federal Reserve has noted, risk management cannot be focused solely on models and individual business units. It requires an enterprise-wide approach that focuses on strategic issues, including those raised by the ongoing reform of the financial-services industry. Federal Financial Analytics has advised several large bank holding companies about alternative charters, helping them to decide if the national bank, thrift or alternative models work best following reorganizations and acquisitions. We have also analyzed complex capital rules, including the Basel III models, identifying proposals that create significant strategic opportunities. For example, we counseled major providers of credit-risk-transfer products and advised them of ways the Basel rules might ensure appropriate capital recognition for their products.
  • Strategic Advice: With the ongoing rewrite of financial-industry rules, Federal Financial Analytics has identified emerging trends and advised clients of developments that create strategic opportunities.  As major companies face unprecedented challenges, we have assessed the changes resulting from the simultaneous rewrite of the U.S. and global regulatory road-map. Key matters include new U.S. and global capital standards, liquidity-risk requirements, mortgage-market reforms, the new framework for asset securitization and the revised standards for deposit insurance, “living wills” and big-firm resolution, compliance with Federal bank stress test requirements.
  • White Papers on Critical Issues: Federal Financial Analytics has developed strategies for meeting the competitive challenges of the new regulatory environment facing banks, insurance companies, securities firms, asset managers, and advocacy organizations.  As part of this service, we have prepared analytical white papers on topics of critical concern to the financial services industry.  These papers are widely cited and have made a meaningful difference in public debate.  Federal Financial Analytics’ work is always rigorous, objective and fact-based. We do not lobby for clients.
  • Funding Strategies: Federal Financial Analytics has anticipated developments in changing asset securitization requirements such as mandatory credit risk retention. We have also anticipated global liquidity-risk standards and recommended best-outcome strategies to our clients.
  • Housing Finance: Federal Financial Analytics has counselled clients throughout the regulatory and Congressional battles surrounding Fannie Mae, Freddie Mac and the Federal Home Loan Banks. We correctly anticipated emerging risks – including providing testimony to Congress as early as 2003 on this point – and warned clients about them. We also monitored GSE activities to anticipate new business ventures that posed competitiveness or systemic-risk concerns, supporting client analysis and advocacy on these critical issues. Going forward, we are assessing the new regulatory structures likely to govern housing finance in general and the GSEs in particular, assisting clients to position themselves advantageously in the midst of these strategic challenges.
  • Board and Senior Management Reports: Incorporating all the skills noted above, Federal Financial Analytics provides boards of directors and senior management with regular legal and reputational-risk assessments.  Typically, this is done through a quarterly report that reviews the policy environment, assesses firm-specific strategic risks and opportunities and determines the degree to which board risk tolerances may be affected by the changed environment.