THE FED CHEERS FOR RISK MANAGEMENT
A recent article, "Taking the angst out of taking a gamble" (Finance, July 14) provides a useful discussion of the risk-management technique called "value at risk" (VAR), in which information about past market volatility is used to quantify an institution's exposure to future market movements and gain insights into a portfolio's risk. This measurement approach represents an important effort by the financial community to improve its management of risk and is one that the Federal Reserve fully supports.
Moreover, contrary to the author's depiction, the Federal Reserve also endorses the decision by the Bank for International Settlements to build upon VAR results in setting bank regulatory capital requirements. Indeed, we worked to bring that standard to fruition and will enforce it as scheduled in 1998, along with our foreign counterparts.
The Federal Reserve's interest in an alternative "precommitment" approach, referred to in the article, reflects the Board's desire to find future ways of promoting market discipline and reducing regulatory intrusion, while constantly improving its supervisory and regulatory process. However, until better tools are found, basing market risk capital requirements on VAR is a big step forward and one that the Board supports.
Division of Banking Supervision & Regulation
Federal Reserve System
WashingtonReturn to top
MAZDA'S CEO: WHAT I DID AT JAGUAR
While I am most appreciative of BUSINESS WEEK's characterization of my abilities and track record, I must correct some errors as they relate to my experience at Jaguar ("The struggle for Mazda's soul," The Corporation, July 21).
First off, I was not responsible for revamping Jaguar's dealer network. Moreover, your facts are incorrect about Jaguar's "poor customer-service scores." Jaguar undertook a major dealer revamping in the mid- to early 1980s, which brought about improvements in customer-handling scores long before I arrived in 1993. In fact, when the J.D. Power index was first published in 1986, Jaguar ranked fourth in customer handling, and it has dropped below the top 10 only once since.
As for the question of whether I rode into Mazda on a white horse, I can assure you that the work ahead will be successful only through the dedicated efforts of the entire Mazda team--and that, as it does at Jaguar, includes the dealers.
Chief Executive Officer
Mazda North American Operations
Editors' note: The customer satisfaction scores provided to us by J.D. Power and Associates combined customer handling with vehicle repair and reliability. The scores Beattie cites refer only to the customer handling component of the J.D. Power survey and are not publicly available.Return to top
APPLE IS RIPE FOR A MERGER
Prince Alwaleed's statement that Apple Computer should "consider any alliance that makes sense" is right on track ("Is Apple mincemeat?" News: Analysis & Commentary, July 28). In line with its involvement in "distance learning" through the Western Governors University project, Apple should ally itself with the leaders of the budding "technotainment" industry.
What would Apple gain? To paraphrase Steve Jobs, it would be part of an "insanely great" business development. BUSINESS WEEK estimated this spring that this could be a $100 billion global business.
If Apple Computer follows this strategy, the millions of future computer owners who live in the world's developing countries will have the opportunity to benefit from Apple's inherently user-friendly operating system--still the better mousetrap of the operating-system world.
Steven G. Brant
Trimtab Management Systems
Brooklyn, N.Y.Return to top