Eighteen months to three years after a bank examination rating is assigned, it provides "little or no useful information about the current condition of the bank," according to Jose A. Lopez of the Federal Reserve Bank of San Francisco.

"In practice, supervisors should probably examine a bank before this point, when supervisory information gathered during the prior exam continues to have some-though diminished-value," Mr. Lopez writes.

Banks should be examined even more frequently during turbulent economic times, he writes. "The rate of information decay is markedly greater for banks that are themselves financially troubled," he says. For a copy of "How Frequently Should Banks Be Examined?" call 415-974-2163 or visit www.sf.frb.org.

Consumer bankruptcy laws should not be rewritten to penalize high-loan- to-value lending, according to two American Enterprise Institute researchers.

Charles W. Calomiris of Columbia University and Joseph R. Mason of Drexel University find that high-LTV lending is only 1% of all mortgages and 2.5% of all credit card loans. Yet these loans disproportionately benefit the economy by providing consumers with lower-cost financing that lenders can easily securitize, the researchers write.

Those benefits would evaporate if Congress adopts a "cram down" provision for high-LTV lending, because lenders would be less willing to make these loans. Under a cram down, the amount of the loan that exceeds the value of the collateral could be eliminated as an unsecured debt.

For a copy of "High Loan-to-Value Mortgage Lending: Problem or Cure?" call 800-269-6267.

A Federal Reserve Bank of Atlanta study investigates the pros and cons of inter-day credit in the payment system. The Federal Reserve recently started charging banks for inter-day credit, which is short-term financing provided to cover temporary shortages in a bank's reserve account.

Payment systems that do not permit inter-day credit, as in Switzerland, are less efficient because banks wait to get paid before making their own payments, write Charles M. Kahn and William Roberds. At the extreme, this could result in gridlock, with no bank willing to make the first payment of the day.

Providing free inter-day loans would eliminate gridlock, but central banks would be forced to incur substantial credit risk, they write. Requiring banks to collateralize inter-day loans would ease gridlock, but could make it tough for small banks that have few assets eligible as collateral.

Charging interest on inter-day loans encourages banks to make payments, but is less effective than free inter-day credit, they find.

For a copy of "Real-Time Gross Settlement and the Costs of Immediacy," call 404-521-8020 or visit www.frbatlanta.org/publica/work_papers/.

Economic expansions do not die of old age, according Joseph H. Haimowitz of the Federal Reserve Bank of Kansas City. "An expansion that has lasted until its 91st month is no more likely to end in the next month than an expansion that has lasted until the 21st month," Mr. Haimowitz said.

Unemployment insurance, increased government spending, and a federal tax system that reduces levies as incomes fall combine to reduce the vulnerability of the economy to downturns, he writes. Since social safety nets were adopted after World War II, he writes, the average economic expansion has doubled in life.

For a copy of "The Longevity of Expansions," visit www.kc.frb.org.

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