Disclosure Fall 2009
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Summer 2009 a newsletter of the Department of Finance, Insurance and Law SUMMER 2008 Contacts Chair perspectives Department of Finance, Lessons for students of the financial crisis Insurance and Law chairperson Gary Koppenhaver Times are interesting for all students of the U.S. financial system. Since the spring (309) 438-8777 and fall of 2008, you get the sense that significant financial history is happening. [email protected] What should our current finance, insurance and law students be taking away as events unfold? Are there Internship coordinators lessons that will help our students deal with present Kim Small for finance majors and future financial turmoil? (309) 438-2928 While debate continues on the causes of the [email protected] financial crisis, a dynamic, changing society makes Debbie Babcock the causes of the crisis less important than the les- for insurance majors sons learned. I offer my observations on two things (309) 438-3368 that students of the financial crisis can learn from the [email protected] extraordinary events of the past 18 months. Undergraduate academic advisor First, it seems clear that our system of financial Nancy Baldoni markets is not immune to behavioral “blind spots.” (309) 438-8385 These blind spots affect investors, financial advi- Gary Koppenhaver [email protected] sors, corporate leaders, and regulators–sometimes simultaneously. The incorrect assessment and mismanagement of risk relative to Financial Management expected returns can be as catching as the flu; the crowd can be dangerous and Association faculty advisors dramatically wrong. Sensitivity to risk varies over time and participants can be Keldon Bauer caught in the illusions of liquidity and precise information. These blind spots put (309) 438-7991 a premium on thinking critically about financial decisions and economic condi- [email protected] tions. As instructors, we build critical thinking into the curriculum to develop Linda Miles these skills, but students need to be aware of the importance of wondering why, (309) 438-2448 for example, investors at times demand so little compensation for risk. [email protected] Second, debate about the value of markets free from direct government/ Joseph Trefzger taxpayer intervention raises significant questions for students of the financial (309) 438-2966 crisis, not clear solutions. The questions alone merit open discussion in class. [email protected] Students must come to realize that nothing is cast in concrete in a dynamic system except a few enduring truths. One truth is the law of unintended Student president consequences, which is evidenced both by Adam Smith’s invisible hand of Collin Geninatti competition and by a government mandate (circa 2000) to increase mortgage [email protected] lending by Freddie and Fannie, as examples. Another truth is that correct decision-making incentives imply “skin in Gamma Iota Sigma the game.” The financial crisis is very much about the loss of trust and cred- faculty advisors ibility between financial market firms; incentives can get no better than acting Debbie Babcock through a position of ownership. (309) 438-3368 A last truth is that private enterprise is good for human progress. Com- [email protected] pared to the alternatives, a free-market economy is best at generating income Yu-Luen Ma and growth, creating wealth and raising productivity. Public policy decisions (309) 438-7081 that fail to reflect these enduring truths risk harming the financial system. [email protected] If you have other financial crisis lessons our students should learn, share them with me. The perspectives of our alums and friends matter and can help Student president our students succeed in an ever-changing economy. Jeremy Gallico [email protected] Warm regards, Gary D. Koppenhaver, Chair and Professor Student internships, summer 2008–spring 2009 New financial planning minor The Department of Finance, Insurance and Law provides experiential learning for guarding the nest egg opportunities for our students through internships with our business partners. In March 2009, Illinois State University approved the offering of a minor degree Based on the idea that students learn program in financial planning by the faculty of the Department of Finance, Insur- best through experience, the department ance and Law starting in the fall 2009 semester. Requirements for the financial sincerely appreciates the sponsorship planning minor include coursework in finance (investments, retirement plan- by the firms listed below. If your firm is interested in participating in the internship ning), insurance, law (estate planning), accounting (personal income taxation), program, please contact Kim Small, Finance and marketing (personal selling). The purpose of the minor is to prepare students internship coordinator, at (309) 438-2928 for the certified financial planner designation. Members of the Department of -Fi or [email protected], or Debbie Babcock, Insurance internship coordinator, at (309) nance, Insurance and Law Advisory Board and the Educational Investment Fund 438-3368 or [email protected]. Board of Directors have long endorsed the minor. The minor places the depart- ment squarely on the side of financial advisors acting under fiduciary duty or the Summer 2008 obligation to put their client’s interest first rather than the suitability standard for Brett Anderson Bank of America clients of brokers and other securities salespeople. Matthew Beach Town of Normal Finance Department Christopher Behrns Gamma Iota Sigma update McLean County Government Thomas Byrne Gamma Iota Sigma, a professional Chicago Partners-Navagant Consulting coed fraternity for students inter- Kristin Church ested in insurance, experienced a AIG landmark year. The fall semester Dane Conaway featured golf lessons, Redbird State Farm Bank tailgating, and participation in in- Vanessa Contreras London Internship, Katie School/NAPSLO dustry events such as the Alumni Golf Outing, RIMS Luncheons, Shawn Cook Gamma Iota Sigma Alumni Golf Outing Seabrook Plantation and the 2008 REBEX Conference, Stacey Darin among other events. The fall also featured a new week of activity celebrating the Enterprise Rent-A-Car chapter’s 17th birthday. The spring semester included participation in Redbird Matt Decker COUNTRY Financial Basketball, local volunteering, and professional development events such as Thomas Doulas the NAPSLO Symposium, 2009 RIMS Conference, and industry speakers. The Rosemont Magic Touch, Inc. fraternity also hosted the first annual Gamma Games, bringing over 20 industry Patrick Doyle professionals and alumni to campus to network in a carnival style atmosphere. Arthur J Gallagher & Co. A full listing of events is available at katieschool.org or by contacting the new Ryan Doyle president, Jeremy Gallico at [email protected]. Arthur J Gallagher & Co. Derek Dudgeon Great Central Insurance Robert Duerr Kubitz and Vaughn Illinois State Export program, New Zealand early career achievement awardees Mark Esposito Alan Kubitz ’94 and Aaron Vaughn ’95 received College of Business Early Career Bermuda Internship, Katie School/AIG Achievement Awards on Illinois State’s Homecoming weekend, October 2008. The Kymberly Forsythe First State Bank of Bloomington award recognizes outstanding young alumni who have demonstrated professional leadership and the potential for future distinction in their careers. Kubitz is direc- continued on page 3 tor of risk management at The HAVI Group LP. His current responsibilities en- compass managing a variety of risks and integrating enterprise risk management practices into the business culture. Kubitz is active in the insurance community and serves as the current president of the Chicago chapter of the Risk and Insur- a newsletter of the Department ance Management Society. Vaughn is a senior research analyst with Edward Jones of Finance, Insurance and Law & Company, making investment recommendations within the health care sector for the firm’s financial advisors and clients. Vaughn also worked as an analyst for Summer 2009 Robert W. Baird & Company, State Farm Insurance, and First of America Bank. Published annually Vaughn is a chartered financial analyst, certified public accountant, and chairman Illinois State University of FIL’s educational investment fund board of directors. Department of Finance, Insurance, and Law Campus Box 5480 Normal, IL 61790-5480 E-mail: [email protected] Web site: www.cob.ilstu.edu/fil 2 Summer 2009 Internships, continued Christopher Franchi State Farm Bank Faculty member news and recognition Matthew Fritzshall Stepping Stone Properties Each year the Department of Finance, Insurance and Law publicly recognizes the Jeremy Gallico outstanding efforts of its full-time faculty members in the scholarship of teaching, Zurich Internship, Katie School the scholarship of discovery and scholarly service to the institution. In 2009, the Amy Gudenrath following individuals were recognized for their exemplary performance: Joseph Carle Hospital Solberg, professor, for outstanding teaching; Yu-Luen Ma, Desiree Hahs Kankakee County Finance Dept associate professor, for outstanding research; and Edgar Sarah Hamad Norton, professor, for outstanding service. Edward Jones The College of Business MBA Association selected Kevin Linda Han Ahlgrim, assistant professor, as the 2007–2008 Outstand- Enterprise Rent-A-Car ing MBA Professor of the year. The same graduate student Justin Harrison Tamayo Financial Services organization selected Sylvie Bouriaux, associate professor, Steven Hempel and