Kent Cherny |

Research Assistant

Kent Cherny, Research Assistant

Kent Cherny is a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. His work focuses primarily on banking, capital markets, and financial policy.

Mr. Cherny holds a BA in English and economics from Ohio State University.

  • Fed Publications
  • Other Publications
Title Date Publication Author(s) Type

 

2010-13 Kent Cherny; Jian Cai; Todd Milbourn; Economic Commentary
Abstract: We review why executive compensation contracts are often structured the way they are, analyze risk incentives stemming from various pay schemes, and examine the tendency of the banking and finance industry toward excessive risk-taking. Studying the typical executive pay structures in banking and finance before the financial crisis reveals some potentially problematic practices. These practices may have encouraged “short-termism” and excessive risk-taking, which are two behaviors bank regulators aim to prevent with their recently issued guidance on incentive compensation.

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2010-6 Kent Cherny; Ben R Craig; Economic Commentary
Abstract: While derivative financial instruments have made the hedging and exchange of risk more efficient, the recent crisis showed that they also pose a substantial threat to financial stability in times of systemic turmoil. Underlying much of this threat is the lack of transparent reporting in the over-the-counter market for these instruments. This Commentary discusses the advantages of one solution to the transparency proble: moving the settlement or trading of derivatives to exchanges or clearinghouses.

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July, 2010 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has dropped slightly, with both long and short rates ticking down Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 1.00 percent rate over the next year, just up from May’s prediction of 0.98 percent. Although the time horizons do not match exactly, this comes in on the more pessimistic side of other forecasts, although, like them, it does show moderate growth for the year.

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May, 2010 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has flattened, with long rates falling as short rates barely ticked up. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 0.98 percent rate over the next year, a bit below April’s 1.17 percent. Although the time horizons do not match exactly, this comes in on the more pessimistic side of other forecasts, although, like them, it does show moderate growth for the year.

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May, 2010 Kent Cherny; Yuliya Demyanyk; Economic Trends
Abstract: The Fed’s intervention and subsequent purchase of mortgage-backed securities (MBS) early last year drove mortgage interest rates down to historic lows, and federal government stimulus measures, such as the tax credit for first-time home buyers, gave new purchasers additional financial resources. The result was a wave of mortgage originations in the middle of 2009, as homeowners refinanced existing mortgages and others bought houses for the first time. However, new origination data from Inside Mortgage Finance shows that origination volumes fell substantially in the first quarter of 2010. This suggests that the mortgage market may slow down now that the refinancing wave has passed and purchaser tax incentives have expired.

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April, 2010 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: In the past two months, the yield curve has moved up and gotten steeper, with long rates rising a bit more than short rates. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 1.17 percent rate over the next year, essentially unchanged from February. Although the time horizons do not match exactly, this comes in on the more pessimistic side of other forecasts, although, like them, it does show moderate growth for the year.

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April, 2010 Kent Cherny; Ozgur Emre Ergungor; Economic Trends
Abstract: Consumption accounts for roughly 70 percent of the country’s gross domestic product. Consequently, a sustainable economic recovery depends on a recovery in household consumption. Will it be a long road ahead for a sustainable recovery?

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April, 2010 Kent Cherny; Jian Cai; Economic Trends
Abstract: Commercial lending by banks has fallen to double-digit, negative growth rates, both on- and off-balance-sheet. The current financial crisis has also impacted the market size and composition of syndicated loans, which are a unique type of commercial loans.

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March, 2010 Kent Cherny; Timothy Bianco; Ben R Craig; John Lindner; Economic Trends
Abstract: On March 16, the Federal Open Market Committee released a statement saying it would hold the Federal Funds target rate at 0 to 1/4 percent, and that “low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Was the market surprised by anything in this statement?

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March, 2010 Kent Cherny; James B Thomson; Economic Trends
Abstract: As the economy emerges from its economic winter, concerns remain about the fragility and robustness of the recovery, in part because of anecdotal evidence that credit flows have yet to return to normal. The most recent data from one of the most important credit channels, commercial bank lending, adds credence to these concerns.

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February, 2010 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has moved up and gotten steeper, with long rates rising a bit more than short rates. Projecting forward using past values of the spread and GDP growth suggests that real GDP will essentially be unchanged from January. Although the time horizons do not match exactly, this comes in on the more pessimistic side of other forecasts. Like them, it does show moderate growth for the year.

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February, 2010 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: A new year has started, and by some reckoning, a new decade, so it may be a natural time to take a look back. This column has been around for three years, giving a full two years of “year-ahead” predictions, and it’s time assess those predictions.

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January, 2010 Kent Cherny; Yuliya Demyanyk; Economic Trends
Abstract: Since our summary of banks’ commercial real estate (CRE) exposure last August, mortgages backed by commercial property have continued to experience weakness in the form of delinquencies and defaults. A handful of factors are perpetuating the stress on nonfarm-nonresidential mortgages and construction loans, in particular.

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January, 2010 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has gotten a bit steeper, with long rates moving up as short rates held steady. The probability of recession coming out of the yield curve is low, and this accords with many forecasts that suggest we have already come out of recession—and remember that the forecast is for where the economy will be in a year.

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December, 2009 Kent Cherny; Jian Cai; Economic Trends
Abstract: The current financial crisis was triggered by severe deteriorations in the U.S. real estate market and sharp increases in mortgage delinquencies and foreclosures, especially among adjustable-rate mortgages issued to subprime borrowers. As a result of the unprecedentedly adverse consequences of the crisis, lenders have reversed the practice of making highly risky mortgage loans and now require that credit standards be followed more strictly. This shift has led to a contraction in supply of residential mortgages. In the meantime, the decline in housing prices also discouraged quality buyers from entering the market, causing a shrinkage of demand. Now that the economy may be stepping out of the recession, the residential mortgage market may also begin to recover.

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November, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has shifted a bit downward and flattened slightly, with long rates dropping a bit faster than short rates. Since last month, the three-month rate has fallen to 0.04 percent (for the week ending November 20). At that rate, $100 invested for a year would earn 4 cents. This is down from October’s already very low 0.07 percent and September’s 0.11 percent. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 1.6 percent rate over the next year. This is down from last month’s prediction.

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October, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has shifted a bit downward and steepened slightly, with short rates dropping a bit faster than long rates. Calculations based on the yield curve suggest real GDP will grow at about a 2.3 percent rate over the next year and that the expected chance of the economy being in a recession next October stands at 3.9 percent.

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October, 2009 Kent Cherny; Ozgur Emre Ergungor; Economic Trends
Abstract: Interest rates on credit cards, which can serve as a barometer for the broader risk profile of consumers as well as the availability of credit to them, have increased over the past two years. Credit card funding costs are improving after policy intervention into the ABS market, but concerns about credit risk, as well as supply and demand factors, will potentially alter the volume and pricing of credit cards in the near term.

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September, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has steepened slightly, with long rates edging up as short rates edged down.

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July 2009 Kent Cherny; Ben R Craig; Economic Commentary
Abstract: Credit derivative instruments allow default risk to be segregated from debt of all kinds. They have granted investors the ability to hedge their portfolios and provided numerous institutions with a new source of income. However, the market for credit default swaps is neither transparent nor regulated, perhaps undermining the stability of the financial system it has helped innovate.

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August, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has flattened slightly, with long rates dropping a bit more than short rates, which barely changed. The expected chance of the economy being in a recession next August stands at 2.6 percent, up from July’s very low 1.8 percent and June’s 0.8 percent. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 2.3 percent rate over the next year.

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August, 2009 Kent Cherny; Yuliya Demyanyk; Economic Trends
Abstract: As rising home foreclosures and delinquencies continue to undermine a financial and economic recovery, an increasing amount of attention is being paid to another corner of the property market: commercial real estate.

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August, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has flattened slightly, with long rates dropping while short rates stayed essentially unchanged. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 2.6 percent rate over the next year. The probability of the economy being in a recession next July, based on yield curve calculations, stands at a low 1.8 percent.

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June, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has become noticeably steeper, with long rates rising dramatically. The difference between short and long rates, the slope of the yield curve, has achieved some notoriety as a simple forecaster of economic growth.

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May, 2009 Kent Cherny; Yuliya Demyanyk; Saeed Zaman; Economic Trends
Abstract: Some reports have shown evidence of contraction in commercial and industrial (C&I) loans, which could make it difficult for businesses to manage cash flow or finance business expansion. We look at some measures of business lending to analyze supply and demand patterns for these loans. C&I loan volume has fallen, but existing credit lines are being tapped more. Demand for loans has also fallen.

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May, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has shifted up and gotten steeper, with both short and long rates rising. The spread between these rates, the slope of the yield curve, has achieved some notoriety as a simple forecaster of economic growth.

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April, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has twisted steeper, with short rates dropping and long rates rising. The difference between short and long rates, the slope of the yield curve, has achieved some notoriety as a simple forecaster of economic growth.

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April, 2009 Kent Cherny; Joseph G Haubrich; Saeed Zaman; Economic Trends
Abstract: Annual asset growth of Fourth District BHCs was 3.5 percent last year, down from 2007’s 5.1 percent growth rate. The U.S. commercial banking sector saw a reduction in total assets during the fourth quarter of 2008, as the financial crisis prompted banks to deleverage or slow their rate of asset growth. Nevertheless, total assets nationally and in the Fourth District did grow over the course of 2008.

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March, 2009 Kent Cherny; Ozgur Emre Ergungor; Economic Trends
Abstract: The Case-Shiller composite price index continues to indicate contraction in U.S. residential home values. In the fourth quarter of 2009, the index stood at 139.14, down a cumulative 26.7 percent from its peak during the second quarter of 2006. By now the story of how we ended up here has become almost passé: a combination of low interest rates, loose lending standards, and financial innovation produced a boom in real estate prices on a broad, national level.

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March, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has moved lower and flattened slightly, with long rates dropping a bit more than short rates, though the difference between them remains strongly positive. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year, on the high side of other forecasts. The chance of the economy being in a recession next March, according to estimates based on the curve, stands at 1.1 percent, up slightly from February's 0.98 percent.

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March, 2009 Kent Cherny; Joseph G Haubrich; Saeed Zaman; Economic Trends
Abstract: The FDIC recently released its fourth-quarter banking summary, giving us the opportunity to examine trends in the FDIC-insured banking industry during 2008. It was a rough year for FDIC-insured banks.

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February, 2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: In the midst of all the depressing news about the economy, the yield curve still might provide a slice of optimism. The yield curve has gotten steeper since last month, with long rates rising more than short rates, and the difference between them remains strongly positive. A steep yield curve usually indicates growth, although the current economic environment may impact its reliability as an indicator. Projections based on it suggest that real GDP will grow at about a 3.3 percent rate over the next year.

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February 2009 Federal Reserve Bank of Cleveland, Economic Commentary Kent Cherny; Ozgur Emre Ergungor; Economic Commentary
Abstract: The current financial crisis is a painful reminder that the developed world is not yet immune to these devastating shocks. But while we haven’t learned to prevent them, we have learned some lessons about what is necessary to contain them once they begin and to limit the damage that follows. As policymakers worldwide focus on resolving the current financial crisis, they might look to Sweden as a useful model for effective strategies.

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February, 2009 Kent Cherny; John B Carlson; Joseph G Haubrich; Sarah Wakefield; Economic Trends
Abstract: In a recent lecture, Federal Reserve Chairman Ben Bernanke added some clarity to the Fed’s policy response to the current financial crisis. He described a framework for understanding the new tools that have been created and employed to support credit markets and restore their functioning. These tools, he pointed out, enable the Fed to respond aggressively to the crisis even though the federal funds rate stands near zero.

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01.20.2009 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: New York Times columnist Paul Krugman doesn't think we should be relying on the yield curve for predictions of economic growth, given the current economic environment. He makes some good points, but they are not decisive and we explain why. Projections based on the curve and GDP growth suggest that real GDP will grow at about a 3.3 percent rate over the next year.

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12.23.08 Kent Cherny; Ozgur Emre Ergungor; Economic Trends
Abstract: Distressed credit markets are changing the look of consumer finance for financial institutions and consumers alike. While the nonmortgage consumer loan assets of commercial banks have grown by roughly 25 percent over the past three years, the recessionary degradation of individuals’ creditworthiness and the lack of easy bank financing may slow or halt this trend.

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12.17.08 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: The yield curve has flattened since November, with long rates falling more than short rates, but the difference between the rates remained strongly positive. The flight to quality and the turmoil in the financial markets may affect the reliability of the yield curve as an indicator, but projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year. This remains on the high side of other forecasts.

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December, 2008 Kent Cherny; Joseph G Haubrich; Saeed Zaman; Economic Trends
Abstract: There are 238 community banks headquartered in the Fourth District. We look at their annual asset growth, income stream, balance sheet composition, liabilities, problem loans, net charge–offs, and coverage ratio.

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November, 2008 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: In the midst of the horrendous economic news of the last month, the yield curve might provide a slice of optimism. Since last month, it has flattened, as short rates fell more than long rates. On the other hand, the historic turmoil in the financial markets also suggests that the historical relationships on which our interpretation of the yield curve depends may not be holding up in times of stress.

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October, 2008 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has gotten steeper, as short rates fell and long-term rates rose. The flight to quality and the turmoil in the financial markets may impact the reliability of the yield curve as an indicator, but projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year. This remains on the high side of other forecasts, many of which are predicting reductions in real GDP.

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October, 2008 Kent Cherny; Ozgur Emre Ergungor; Economic Trends
Abstract: The deterioration of the housing market shows few signs of nearing an end. Home price indexes have continued to fall. Mortgage-related losses are taking a big bite out of mortgage lenders’ profits, and increasingly, the deterioration in earnings is affecting more than a few large institutions and becoming a widespread problem.

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09.29.08 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has flattened modestly, with short-term interest rates increasing and longer rates holding steady. The financial crisis showed up in the yield curve, with rates falling since last month, as investors fled to quality.The flight to quality and the turmoil in the financial markets may impact the reliability of the yield curve as an indicator, but projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year.

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August, 2008 Kent Cherny; Michael F Bryan; Joseph G Haubrich; Brent Meyer; Economic Trends
Abstract: Since last month, the yield curve has flattened modestly, with both short-term interest rates increasing and longer rates holding steady. The yield curve slope became somewhat flatter, with short rates moving up, and the spread remains positive. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year.

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July, 2008 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has taken a parallel upward shift, with both short-term and long-term interest rates rising. The yield curve slope became slightly flatter, with both long and short rates moving down. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year—on the high side of other forecasts.

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June, 2008 Kent Cherny; Joseph G Haubrich; Economic Trends
Abstract: Since last month, the yield curve has taken a parallel upward shift, with both short-term and long-term interest rates rising. The yield curve slope stayed the same, with both long and short rates edging up. Projecting forward using past values of the spread and GDP growth suggests that real GDP will grow at about a 3.0 percent rate over the next year—on the high side of other forecasts.

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Title Date Publication Author(s) Type

 

February, 2009 Kent Cherny; Ozgur Emre Ergungor; Press Release
Abstract: As policymakers worldwide focus on resolving the current financial crisis, they might look to Sweden as a useful model for effective financial crisis resolution, according to a study released today by the Federal Reserve Bank of Cleveland.

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