Tag Archives: credit crisis

Cost take out and performance improvement

In this video Jack Perkins of the Financial Times interviews, Frank Mackris, head of BearingPoint’s banking practice. The video was conducted during the Financial Times Cost, Performance and Market Survival Editorial Breakfast. In the interview Frank discusses how cost take out and performance improvement needs to become a greater imperative for financial services organizations. He examines how companies can make cost take out more of a priority, which may mean a fundamental change of the company’s cost structure and the importance of executive sponsorship.

Surviving the Credit Crunch: Tactics and Strategies for Loss Mitigation

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Join BearingPoint Managing Director, Lowell Alcorn, as he explores the strategies needed to understand loss mitigation. In recent weeks we’ve seen all the turbulence within some huge financial services organizations, and many are wondering what lessons can be learned from this crisis. When speaking with Lowell Alcorn, he explained that the two most important take-aways from the crisis are the need to improve risk management and managing data through aggressive loss mitigation. Key executives need to understand their risks and be able to report those risks. Many organizations also need to tighten up their aggressiveness around loss mitigation. Each and every company out there should be able to fulfill those two requirements when conducting business.

For future success, key executives should outline clear incentives, process and partnership changes. These three elements will keep a disaster from happening again. For example, as loans are being put together, we need to ensure that securitization documents need to be reviewed and possibly rewritten; a great case for proper process changes. The investors who own the loans need to form a tighter relationship to outline some common incentives. This will define a clear partnership where incentives are agreed upon. These investors also need to have leeway. Right now it’s contractually based, but there needs to be more agreement to ensure a successful outcome.

By making the necessary changes outlined, it will provide the end customer with more flexibility and stability in the future. This flexibility might provide someone with the opportunity to stay in their home, or different options to make payments. This will also ensure that the end customer has provided a lot more documentation prior to being granted funds they’ve requested. This crisis has taught us that we need improved risk management and reporting both internally and externally to ensure that risk is managed appropriately and that everyone involved is up-to-speed on how and why the transaction transpired.

Banking on Application Development

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Join BearingPoint Managing Director, Paul Ringmacher, as he discusses how BearingPoint recently helped a major North American bank replace a paper-based loan origination system for its small-business customers.

When completed, the project took small-business banking loan origination to a new level. An inefficient manual, paper-based system was transformed into an intelligent Web-based, front-end loan capture system used by bankers in the field. The project also features automatic interactions with back-office systems. In the first three months, the initiative became a field-tested success.

Today, it delivers straight-through processing, significantly decreasing front-end submission times, reducing decision times from up to six hours to less than 10 minutes—in most cases—and significantly lowering administrative overhead and application processing costs.

Risk Strategies for Market Survival

Join BearingPoint Senior Business Advisor, Larry Taylor, as he explores some of the risk strategies that can assist with market survival. With all the turmoil in the financial services space in recent weeks, it’s important to know how the industry got in to this ‘mess’ to prevent future occurrences. In this podcast, we discuss the fundamental changes that every company needs to make, as well as steps to go about implementing.

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The major change all companies need to make is to dispose of non-working assets. If an asset hasn’t been profitable in over a year, it’s time to move on. Another change that is focused on is the need for regulatory compliance. Each and every organization needs to emphasize regulatory requirements efficiently. Lastly, you need to “shrink smart” and manage risk management in an appropriate fashion.

Throughout this podcast you will learn the “right” way to cut expenses and how to keep the regulators happy. We also found that there are many financial institutions that have remained successful despite the recent downturn. Tune in to learn the secret to their success and ways to bring their strategies into your own environment.

Surviving the Credit Crunch: Tactics and Strategies for Risk, Data and Loss Mitigation

Join BearingPoint Managing Director and Senior Vice President of Global Markets, Peter Horowitz, as he explores the recent credit crisis and its contributors. With all the turmoil in the financial services space over the past few weeks, it seems that one must look at the source of the problem to really understand how it originated. It started out with a large amount of credit, coupled with lax lending standards and many heavy borrowers which created a heavy base of players, such as the mortgage owners and banks. It then trickled down to those that weren’t even familiar with the borrower or the actual real estate itself. This ‘mortgage value chain’ was the beginning of the turbulence we are all becoming so familiar with.

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So what actually caused the crisis, especially within investment banks? The problem was too much leverage. These banks did not have sufficient capital to support the size of their ownership positions. When the position turned against them, both realized and unrealized losses, it wiped out their capital. It really comes down to the fact that their risk management systems failed the senior management of these giant organizations. It was so complex that the firms could not keep up with the changes.

BearingPoint has taken the proper measures to ensure their clients are being offered the most efficient solutions to deal with all the turbulence in the market. We offer a wonderful suite of solutions, such as our Risk Compliance and Security practices Trade Performance Solution that is assisting both buy and sell-side clients with all their risk-related issues. Our banking practice has also just introduced their Default Loan Loss Mitigation Solution, which is assisting clients with reducing the costs of defaults and foreclosures with investors. BearingPoint has been actively engaged with all their clients to ensure they are offering the most efficient and cost effective solutions to respond to this financial crisis and prepare for a successful future.

Mortgage Servicer: The Vital Role

Join BearingPoint senior manager Marianne Lamkin as she explores the role of a mortgage servicer and why the role is so important. Typically, a mortgage servicer collects payments from the borrowers, and above all, manages the day-to-day relationship. When a borrower cannot commit to a payment schedule or has come into an unfortunate time, the mortgage servicer is the one who will work out a plan and determine the best course of action for all parties.

With a large number of borrowers being threatened with the recent credit crisis, there is a lot at stake. Many individuals are at risk of losing their home and/or business and the servicer is stepping in to help remedy the situation. With assistance comes some monitoring on the borrowers end. Anyone who has contact with a servicer needs to be concerned with how they are managing the relationship. Luckily, there are resources such as data reports that the servicer is required to supply. It’s essential that the stakeholders talk to the servicers, those that are managing the operations and the default managers. The most important thing is that a stakeholder needs to be truly sure that they understand the risks and how they can manage those risks and take proper precautions. If they don’t have the expertise, they need to find someone who does.

That’s where BearingPoint comes in. We can assist the client with outlining the risks and determining how well their servicer is managing their assets. Our new thinking in this space can help ensure our clients are meeting their legal and market obligations, as well as profiting financially in this ever changing world.

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