from the world's big
Another Scenario for AIG
Ernest (Ernie) T. Patrikis is a partner White and Case. During his 30-year career at the Federal Reserve Bank of New York, Mr. Patrikis served as General Counsel for many years and later acted as Chief Operating Officer in his role as First Vice President. He also served as Deputy General Counsel and an alternate member of the Federal Open Market Committee, a staff member of the President's Working Group on Financial Markets that was created in the aftermath of the 1987 financial markets crisis, a member of the Committee on Payments and Settlement Systems of the G-10 central bank governors, legal advisor to the Basel Committee on Banking Supervision, and one of the principal drafters of the US International Banking Act of 1978. Mr. Patrikis began his eight years with AIG as Special Advisor to the Chairman in 1998 and became General Counsel and Senior Vice President in 1999. As General Counsel, he directed one of the largest corporate law departments in the world, managing all of AIG's corporate, litigation, governance, regulatory, compliance and enforcement matters.
Question: Would the situation have been better or worse if the bailout had gone to AIG counterparties rather than to AIG itself? (Tyler Cowen, Marginal Revolution)
Ernest Patrikis: The bailout got to AIG counterparties. Well, I guess they were bailed out. I don’t know what that means. Does that mean if AIG had failed? I don’t fully understand the question. Is it assumed that AIG failed and the failure of AIG would cause knock on failures of other firms would have to be bailed out if AIG were in a bankruptcy proceeding? It would have been messy.
I really saw the AIG problem in another light. I think we saw, if I remember correctly, the beginning of some runs in Asia. Life insurance in Asia is a savings product. I think Asians will gamble on anything except their lives and there were some runs. And that would have had a horrendous affect and countries where AIG was a major insurer, Taiwan, Thailand, Philippines, Hong Kong, huge problems there, plus the Narcon affects here of the major banking organizations who were the counterparties who needed the collateral. So, I think it was a variety of issues.
And if AIG had gone into bankruptcy, I think the subsidiaries would have had a harder time continuing in business. At least, as I see it, Chartis, now of AIG Property and Casualty Subsidiary, is percolating along doing fairly well, it’s taken a beating with competitors. The life insurance company in the states is doing fairly well; the companies outside the United States are doing fairly well, so it’s very interesting,
AIG had a flat organization chart with profit centers and with the exception of financial products and then those who needed financing, I mean the ILFC, the aircraft leasing company, has huge amounts of money to rollover. Good company, well run, and the issue is certainly not credit worthiness, but financing. And then AIG’s subprime lending sub. I learned there are different kinds of subprime lending. There’s the good subprime loans and the bad subprime loans and that subsidiary was doing fairly well the last time I talked to people. So, what I see AIG is doing is just exacerbating a problem. The Lehman shock to the system, the AIG shock enforces it. And AIG has really become much more of a political issue because of the amount of the bailout.
Question: How difficult would it have been if a non-bank resolution authority was in place to wind down AIG and transfer its obligations? (Dan Indiviglio, the Atlantic Business Channel)
Ernest Patrikis: Well, if we had something like the proposed legislation which would cover AIG because it has a federal savings bank, then AIG itself could have become part of a bridge bank. In other words, the holding company in effect would be there and all its assets transferred, it would have adversely affected the shareholders and whatever creditors were not transferred over and continued in business. This is the resolution that is being considered by Congress, which I think is helpful for institutions who live on liquidity and liquidity is very important to them.
If that resolution authority hadn’t been in place, it would have been a lot easier to do it. Instead of this thing with the Fed lend some money and the Treasury lend some money and there’s a lot of opaqueness to that and one really has to drill down to understand it all. But a bankruptcy from AIG would have affected all of the subsidiaries I think and it would have been in much worse shape than today.
Question: How would you address the problem of regulatory capture? (Ryan Avent, The Economist)
Ernest Patrikis: I really don’t see it. I look at my own career of 30 years at the Fed where I did a lot of supervision. I have a lot of friends in commercial investment banks. That didn’t affect me when it came to doing remedial work. I think the answer is, we got things done faster because we knew each other, we’ve dealt with each other over the years. I really don’t see regulatory capture.
And this goes go a whole other point that I’d like to get into if anyone hasn’t asked the question. There is the structure of the Federal Reserve Banks. Each Federal Reserve Bank has nine directors, three of them are appointed by the Board of Governors including the Chairman and Deputy Chairman of the Reserve Bank, and six are elected by shareholders. One’s a big bank director, one’s a medium bank director, and one’s a small bank director, and the others are commerce industry, agriculture, labor. They do not get into bank supervision at the Fed. Where they help the fed is in terms of what they see in the economy, what people are telling them. These are usually people who are leaders in their area, be it a union, or banking, or large business organization, global institution. And provide a lot of insight into what’s going on in the economy. Every two weeks, they meet and they vote on an interest rate, and then that goes down to the Board of Governors in Washington, along with a message which sums up the director’s feelings of up, down, or stay the same. And that is not effective until approved by the Board of Governors.
That system has worked so well over the years about giving intelligence to the Reserve Banks, the Board of Governors. Again, these people do not get involved in bank supervision. Some people want to change that. And in effect want to make the Reserve Banks much closer to the Federal Government than they are today. And I think that’s not going to happen. I’ve asked myself why over the years at the Federal Reserve Bank in New York, where people in the community, so willing to tell us about things wrong. And I remember once an SEC Chairman saying, “Why is it they call you, and they don’t call me?” And the answer is, I don’t think capture. I think it’s trust, relationships over the years being in the market and that’s an issue that’s being pushed on and I just don’t think it’s right.
Question: Should the size of large institutions be an area of concern for reasons of political influence and systemic risk? (Ryan Avent, The Economist)
Ernest Patrikis: I don’t think that size alone is an issue. I mean, every institutions does the right thing, they’re reporting fully the amounts they spend on lobbying. I know when I was at AIG we were scrupulous about it and we always wondered about whether other firms were as scrupulous as we were in terms of reporting what we did.
I would go, not monthly, but periodically go and visit, not to lobby, but to let people on “The Hill” know where we were going, directions, issues, things like that. I don’t know that large institutions – I didn’t hear large labor unions in that statement. I didn’t hear about other organizations in that statement, and smaller institutions also have organizations, financial and otherwise. There are the trade associations. I don’t think it’s any more pervasive – but I’ve always thought in banking, no bank could get a law, they might be able to slow one down, but very, very difficult for a bank to say, here’s what we want, please enact it. I just don’t see that kind of capture of “The Hill.”
Question: What would the situation be today if Lehman had been rescued? (Steven Landsburg, The Big Questions)
Ernest Patrikis: I think it would have been different in the degree of severity. We still would be going through this crisis. I just think the shock to the system was too strong. And if we didn’t show the resolve that we needed to, and then when it came to issues like the legislation, how poorly the bill was handled, the TARP Bill was handled, both in the administration and in Congress. So the Narcon of the Lehman is equally as bad as the decision not to save Lehman. We’d still have all the problems with credit worthiness and those securitizations today, but I think the severity would have been tempered somewhat.
Recorded on November 9, 2009
What would have happened if the government had let the giant fall? Former head counsel Ernie Patrikis explains.
Sallie Krawcheck and Bob Kulhan will be talking money, jobs, and how the pandemic will disproportionally affect women's finances.
Want help raising your kids? Spend more time at church, says new study.
- Religious people tend to have more children than secular people, but why remains unknown.
- A new study suggests that the social circles provided by regular church going make raising kids easier.
- Conversely, having a large secular social group made women less likely to have children.
Be fruitful and multiply<p>Scientists in the United Kingdom collected data on more than 13,000 mothers and their children. Most of them were religious, but 12 percent were not. The data included information on their church habits, social networks, number of children, and the scores those children achieved on a standardized test.</p><p>In line with previous findings that religious women have more children than secular women in industrialized countries, a connection between at least monthly church attendance and fertility was confirmed. However, religious parents showed they could avoid the pitfalls that having more children can bring. </p><p>Typically, more children in a family leads to reduced cognitive ability and height in each <a href="https://academic.oup.com/ije/article/37/6/1408/729795" target="_blank">child</a>. Some studies find that children do less well in school for each <a href="https://link.springer.com/article/10.1007/s13524-016-0471-0" target="_blank">additional sibling they have</a>. This makes a kind of intuitive sense, as parents with more children would have to divide their time, energy, and resources among more people as families expand. One would expect that the larger families would also lead to things like lower test scores. </p><p>Despite the expectation, the children of religious parents didn't have lower scores on standardized tests. There were small positive relationships between the size of the mother's social network, the number of co-religionists helping out, and the children's test scores. However, this association was small, didn't show up in all of the testings, and was unrelated to other variables. </p> These effects might be explained by the size and helpfulness of the social networks around the more religious. Women who went to church at least once a month had more extensive social networks than those who never go or who attend yearly. These social networks of co-religious people mean that there are more people to turn to for help with child-rearing, a point also demonstrated in the data. The amount of aid women got from their fellow churchgoers was also associated with a higher fertility rate. <br> <br> Conversely, an extensive social network was associated with fewer children for secular women. This finding is in line with <a href="https://journals.sagepub.com/doi/10.1207/s15327957pspr0904_5" target="_blank">previous studies</a> and suggests that the social networks comprised of co-religious individuals differ from those found elsewhere.
So, how quickly should I join a local religious group?<div class="rm-shortcode" data-media_id="6RrmYM8M" data-player_id="FvQKszTI" data-rm-shortcode-id="9eb4740a7d1e10108a75fd2ed627a90f"> <div id="botr_6RrmYM8M_FvQKszTI_div" class="jwplayer-media" data-jwplayer-video-src="https://content.jwplatform.com/players/6RrmYM8M-FvQKszTI.js"> <img src="https://cdn.jwplayer.com/thumbs/6RrmYM8M-1920.jpg" class="jwplayer-media-preview" /> </div> <script src="https://content.jwplatform.com/players/6RrmYM8M-FvQKszTI.js"></script> </div> <p>The study is not without its faults, and more investigations into the relationship between fertility, childcare, ritual, and social networks are needed.</p><p>These findings all show correlation, not causation. Though it might be said the results point towards causation, various alternative interpretations of the data are apparent. The authors note that most religions are explicitly pro-natal. It is possible that religious women have internalized these values and simply choose to have more children than secular women do.</p><p>This idea is similar to a potential interpretation of why large social networks have the opposite effect for secular women. The authors suggest that, in some cases, these more extensive social networks are associated with work and exert an anti-natal influence. Again, the people who build such networks may be people unlikely to have large families under any circumstances.</p><p>However, the researchers' hypothesis endured. The help religious women get from their church-based social networks allows them to have larger families than those who lack these support systems. In some instances, these support systems also prevent the adverse effects of larger families. </p>
The community religion offers<p>As we've mentioned <a href="https://bigthink.com/culture-religion/what-is-secular-humanism" target="_blank">before</a>, religion offers a community, and a community provides social capital. As religion continues to decline in the West, the social bonds of faith communities that used to tie social communities together begin to decay. However, as has been noted by a variety of observers for the last few decades, fewer and fewer new organizations appear ready to replace religion as a source of community in our lives.</p><p>While many different organizations might offer social support that religion once provided the whole of western society, this study shows that different social circles can differently affect the people in them. This finding must be considered by those trying to find new communities to join or the authors of future research. </p><p>The community offered by religious groups provides real benefits to those who join them. As this study shows, having the support network religious community offers allows some parents to avoid pitfalls that bedevil those lacking similar support. It suggests that previous studies demonstrating that group ritual offers benefits like increased amounts of <a href="https://journals.sagepub.com/doi/10.1177/0956797612472910" target="_blank">group trust</a> and <a href="https://journals.sagepub.com/doi/10.1177/1069397103037002003" target="_blank">cooperation</a> are onto something and that those benefits have a variety of applications. </p><p>While this study is not without its blind spots, it offers a strong starting point for further investigations into the nature of ritual in our modern lives and how local support networks remain vital in our increasingly globalized world. </p>
Health officials in China reported that a man was infected with bubonic plague, the infectious disease that caused the Black Death.
- The case was reported in the city of Bayannur, which has issued a level-three plague prevention warning.
- Modern antibiotics can effectively treat bubonic plague, which spreads mainly by fleas.
- Chinese health officials are also monitoring a newly discovered type of swine flu that has the potential to develop into a pandemic virus.
Bacteria under microscope
needpix.com<p>Today, bubonic plague can be treated effectively with antibiotics.</p><p style="margin-left: 20px;">"Unlike in the 14th century, we now have an understanding of how this disease is transmitted," Dr. Shanthi Kappagoda, an infectious disease physician at Stanford Health Care, told <a href="https://www.healthline.com/health-news/seriously-dont-worry-about-the-plague#Heres-how-the-plague-spreads" target="_blank">Healthline</a>. "We know how to prevent it — avoid handling sick or dead animals in areas where there is transmission. We are also able to treat patients who are infected with effective antibiotics, and can give antibiotics to people who may have been exposed to the bacteria [and] prevent them [from] getting sick."</p>
This plague patient is displaying a swollen, ruptured inguinal lymph node, or buboe.
Centers for Disease Control and Prevention<p>Still, hundreds of people develop bubonic plague every year. In the U.S., a handful of cases occur annually, particularly in New Mexico, Arizona and Colorado, <a href="https://www.cdc.gov/plague/faq/index.html" target="_blank">where habitats allow the bacteria to spread more easily among wild rodent populations</a>. But these cases are very rare, mainly because you need to be in close contact with rodents in order to get infected. And though plague can spread from human to human, this <a href="https://www.healthline.com/health-news/seriously-dont-worry-about-the-plague#Heres-how-the-plague-spreads" target="_blank">only occurs with pneumonic plague</a>, and transmission is also rare.</p>
A new swine flu in China<p>Last week, researchers in China also reported another public health concern: a new virus that has "all the essential hallmarks" of a pandemic virus.<br></p><p>In a paper published in the <a href="https://www.pnas.org/content/early/2020/06/23/1921186117" target="_blank">Proceedings of the National Academy of Sciences</a>, researchers say the virus was discovered in pigs in China, and it descended from the H1N1 virus, commonly called "swine flu." That virus was able to transmit from human to human, and it killed an estimated 151,700 to 575,400 people worldwide from 2009 to 2010, according to the Centers for Disease Control and Prevention.</p>There's no evidence showing that the new virus can spread from person to person. But the researchers did find that 10 percent of swine workers had been infected by the virus, called G4 reassortant EA H1N1. This level of infectivity raises concerns, because it "greatly enhances the opportunity for virus adaptation in humans and raises concerns for the possible generation of pandemic viruses," the researchers wrote.
A neuroscientist argues that da Vinci shared a disorder with Picasso and Rembrandt.
- A neuroscientist at the City University of London proposes that Leonardo da Vinci may have had exotropia, allowing him to see the world with impaired depth perception.
- If true, it means that Da Vinci would have been able to see the images he wanted to paint as they would have appeared on a flat surface.
- The finding reminds us that sometimes looking at the world in a different way can have fantastic results.
The study<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xODc3Mjc2NS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY1MTA4MDg2NH0.T-98YvLjS9mUCQkgqHyV43Q7h_JIiubrev-Fp_0j4Pg/img.jpg?width=1245&coordinates=0%2C38%2C0%2C579&height=700" id="58346" class="rm-shortcode" data-rm-shortcode-id="674799ba34e115a2e9a3e94c366bfc26" data-rm-shortcode-name="rebelmouse-image" />
The Virtuvian Man. Christopher Tyler suggests that Da Vinci used his own image as a template for the face in the drawing.
Vitruvian Man, by Leonardo da Vinci created c. 1480–1490<p><a href="https://www.city.ac.uk/people/academics/christopher-tyler" target="_blank">Professor Christopher Tyler</a> of the City University of London's optometry division analyzed six pieces of Renaissance art by or held to be images of Da Vinci, including the famous <em>Vitruvian Man. </em>By looking at the paintings, drawings, and statues and applying the same techniques optometrists use on patients, Tyler was able to conclude that the eyes of the men depicted were misaligned.</p><p> He concluded that, if the images he analyzed were truly reflective of how Da Vinci looked, that the great artist had a mild case of exotropia. </p>
How would this have helped him paint?<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="b221010aa7688734d4d6a41f0df5933f"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/j6F-sHhmfrY?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><a href="https://shileyeye.ucsd.edu/faculty/shira-robbins" target="_blank">Shira Robbins</a>, a professor of ophthalmology at the University of California at San Diego, who was not involved with the project, explained to <em><a href="https://www.washingtonpost.com/news/morning-mix/wp/2018/10/19/leonardo-da-vincis-genius-may-be-rooted-in-a-common-eye-disorder-new-study-says/?utm_term=.d3f44ed91c16" target="_blank">The Washington Post</a> </em>how individuals with exotropia often turn to additional information to help understand the world around them:</p><blockquote>"What happens in some people is when they're only using one eye . . . they develop other cues besides traditional depth perception to understand where things are in space, looking at color and shadow in a way that most of us who use both eyes at a time don't really appreciate." </blockquote><p>Dr. Robbins agrees that, if the artworks analyzed accurately depict Da Vinci, then he probably had exotropia.</p><p>If Da Vinci did have a mild form of the condition, which would allow him to focus with both eyes when concentrating and with one when relaxed, Tyler asserts that the famed artist could have viewed the world in two or three dimensions at will, showing him the world exactly as he would need to recreate it on a flat surface. Quite the superpower for an artist.</p>
Does this mean Da Vinci would have been a hack if he had normal eyesight?<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xODc3MjY5NS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYyMjYwOTgxOH0.eSu3YBpCuaDj59-4lzSeZ1WgwtV2ETGiWHqczzW3how/img.png?width=980" id="9c323" class="rm-shortcode" data-rm-shortcode-id="edd4e9e9d9c1156a53242df6288d7cc0" data-rm-shortcode-name="rebelmouse-image" />
A graph showing the difference in where each eye is focused for each painting, drawing, and statue used in the study. The larger the difference, the more pronounced the exotropia is in the image.<p>Not at all. What Dr. Tyler is suggesting is that the tendency of people who have exotropia to rely on using one eye to see the world and thereby lose some depth perception allowed Da Vinci to understand better how the three-dimensional objects in the world could be translated into a two-dimensional image on a canvas. This could account for some of Da Vinci's skill in depicting shadow and subtle changes in color, since he would have relied on these details to understand the world. <br><br>His polymathic brilliance extended far beyond art, and nobody is claiming that his ideas for flying machines, tanks, or <a href="http://www.da-vinci-inventions.com/davinci-inventions.aspx" target="_blank">other inventions </a>were at all influenced by a vision problem.</p>
How can we know this? He has been dead for five hundred years.<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="c26fc51b0aebbcd6905593015fec79e5"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/LRAptNtN9-A?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>There are reasons to be cautious anytime we make claims about people who are long dead. In this case, we have the bonus problem that we aren't 100 percent sure that the images used are supposed to look like Da Vinci. </p><p> That is the major caveat of the idea; all of the images used as evidence of his condition are assumed to look like him. While some of the images, like the <a href="https://en.wikipedia.org/wiki/David_(Verrocchio)" target="_blank"><em>David</em> by Andrea del Verrocchio</a>, are generally agreed to be based on Leonardo the other pictures are claimed to be reflective of him based only on his statement that "[The soul] guides the painter's arm and makes him reproduce himself, since it appears to the soul that this is the best way to represent a human being." </p><p>Tyler also argues that the portraits he claims are based on Da Vinci share similarities with the images generally accepted to be portraits of him; including similar hair and facial features. This lends weight to the idea that the artist incorporated his own traits into his artwork, including his vision problem. </p><p>Leonardo da Vinci was undoubtedly one of the greatest geniuses of all time. If he had exotropia, then it was merely a minor addition to his artistic skills. It does, however, give us a literal example of how people who look at the world differently can use that vantage point to their advantage to create things we all can appreciate. </p>
The word "learning" opens up space for more people, places, and ideas.
- The terms 'education' and 'learning' are often used interchangeably, but there is a cultural connotation to the former that can be limiting. Education naturally links to schooling, which is only one form of learning.
- Gregg Behr, founder and co-chair of Remake Learning, believes that this small word shift opens up the possibilities in terms of how and where learning can happen. It also becomes a more inclusive practice, welcoming in a larger, more diverse group of thinkers.
- Post-COVID, the way we think about what learning looks like will inevitably change, so it's crucial to adjust and begin building the necessary support systems today.