For teaching the CAPM I'd like to show an example of two similar companies (i.e., similar asset betas) with very different equity betas due to leverage. Anyone know a good example off the top of their heads? Thanks in advance.

SVB got in trouble for investing in MBS. It’s certainly not alone in doing so. Why do banks invest in assets like MBS in the first place? 1/

Re bank accounting and unrealized losses: 1. As many have noted, banks are sitting on big unrealized losses on loans and securities. They don’t appear on the balance sheet because loans and securities are held at book value and not marked to market. How worried should we be?

My NYU Stern colleagues and I have put together an e-book "SVB and Beyond: The Banking Stress of 2023." It brings together different perspectives on how we got here and what to do next. Check it out! stern.nyu.edu/experience-ste…

Race prediction algorithms, which are widely used by regulators, have high and problematic errors in the small business lending context, from Dan Greenwald 🇺🇦, Sabrina T. Howell, Cangyuan Li, and Emmanuel Yimfor nber.org/papers/w31646

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Talented students interested in working with Arpit Gupta and myself on research in economics and household finance, please apply!

Wealth inequality increases when r declines👇 papers.ssrn.com/sol3/papers.cf…

The key driver of this tight relation between inequality and r is the fact that the wealthiest households have much duration than other households, leading to the concentration of capital gains in the right tail of the wealth distribution when r declines.

Banks facing losses on their securities portfolios cut lending to firms, but mainly when those losses tighten their capital requirements, from Dan Greenwald 🇺🇦, John Krainer, and Pascal Paul nber.org/papers/w32449