College of Management Unveils Financial Services Analysis; Federal Reserve's Roger Ferguson Lends National Perspective

By Leigh DuPuy

As the region inches toward economic recovery, College of Management (CM) faculty have unveiled a comprehensive analysis of the future of the financial services industries in the Commonwealth for discussion with industry trailblazers, top business leaders, and the Federal Reserve's Roger Ferguson at the Boston Stock Exchange (BSE).

CM Dean Philip Quaglieri kicked off the conference with a ceremonial bell-ringing on the floor of the stock exchange, surrounded by Kenneth Liebler, chairman and chief executive officer of the Boston Stock Exchange, Chancellor Jo Ann Gora, and Arindam Bandopadhyaya, professor of accounting and finance and coauthor of the report "Down but Not Out: The Future of the Financial Services Industry."

Meeting in The Vault, a onetime bank vault converted into meeting space, Bandopadhyaya presented the report's key finding that though the industry's fortune may be temporarily down, its future is bullish and the Boston area and Massachusetts will continue to benefit from the industry's strengths.

The report, developed by CM's Bandopadhyaya, Miranda Detzler, and Mohsin Habib, with assistance from Lawrence Franko, predicted a continued demand for financial services, firm growth for the mutual fund industry, and a changing role for asset managers. The report also warned of future industry mergers and hedge fund competition.

"This is a provocative report," said Paul Connolly, vice president of the Federal Reserve Bank of Boston, who moderated a high-powered panel with Charles Clough, founder and CEO of Clough Capital Partners; Edward D'Alelio, former manager of Putnam Investments; Michael DiBiase, senior vice president of Fidelity Investments; and Dennis Ferro, CEO and chief investment officer of Evergreen Investments.

Delving into the report's discussion of hedge funds, industry consolidation, and outsourcing of technology, the panel provided a wide range of discussion as to what the future holds for the mutual fund industry and financial services overall in Massachusetts.

To provide a national scope, Roger W. Ferguson, vice chairman of the Board of Governors of the Federal Reserve System, examined the evolution and performance of the financial services industry in his keynote address, a revisiting of issues outlined in his 1998 address at CM's first conference examining the industry.

"Turning first to the recent recession and our unusually slow recovery, I think that the most remarkable fact regarding the banking industry during this period is its resilience and retention of fundamental strength, even at those institutions whose earnings were negatively affected by the slowdown," said Ferguson, who expressed optimism in the industry's complex landscape.

He continued, "I would argue that the U.S. banking structure has generally remained competitive, and in some cases has become more competitive, over the recent period of intense merger activity and institutional and legislative change. I am optimistic that this dynamic competitiveness, helped along every now and then by antitrust enforcement, will continue."
The full text of Ferguson's keynote address and the report "Down but Not Out: The Future of the Financial Services Industry" are available at www.mgmt.umb.edu/

Image: Coming together at the Boston Stock Exchange: Arindam Bandopadhyaya, chairman of the Accounting and Finance Department and associate professor of finance; Roger Ferguson, vice chairman of the Board of Governors of the Federal Reserve System; Miranda Detzler, assistant professor of finance and management; Kenneth Liebler, chairman and chief executive officer of the Boston Stock Exchange; Philip Quaglieri, dean of the College of Management; and Mohsin Habib, assistant professor of finance and management. (Photo by Harry Brett)

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