Stephen J. Ong |

Vice President, Supervision and Regulation

Stephen Ong is a vice president in the Banking Supervision and Regulation Department at the Federal Reserve Bank of Cleveland responsible for risk supervision and policy development.

Mr. Ong joined the Bank in 1988 as a bank examiner and later transferred to the Bank’s Cincinnati Branch to serve as regional director of the examination function. He returned to Cleveland in 1996 when he was promoted to assistant vice president in charge of the specialty areas of examination, including consumer compliance, information systems, and fiduciary and securities activities. In 1998, Mr. Ong was appointed corporate secretary and assumed responsibility for the Bank’s Corporate Communications and Community Affairs Department. From 1997 to 2000, he was assistant secretary, and then secretary, of the Conference of Presidents of the Federal Reserve System, a group of presidents from each of the Reserve Banks that meets periodically to discuss matters of common interest and to consult with and advise the system’s Board of Governors.

Mr. Ong currently serves as chairman of the board of trustees of the Center for Community Solutions, a nonprofit organization focused on health and human services issues in the Greater Cleveland area. He is also treasurer and a member of the board of trustees of the Cleveland Council on World Affairs and an advisor to MotivAsians for Cleveland, a nonprofit organization focused on providing opportunities for community involvement and leadership development for Asian-American professionals.

A native of Barberton, Ohio, Mr. Ong holds a bachelor’s degree in business administration from the University of Akron.

Fed Publications
Other Publications

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Date

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Policy in Adaptive Financial Markets—The Use of Systemic Risk Early Warning Tools	May, 2013	Federal Reserve Bank of Cleveland, working paper no. 13-09	Stephen J Ong; Dieter Gramlich; Mikhail V Oet;	Working Papers
	Abstract: How can a systemic risk early warning system (EWS) facilitate the financial stability work of policymakers? In the context of evolving financial market dynamics and limitations of microprudential policy, this study examines new directions for financial macroprudential policy. A flexible macroprudential approach is anchored in strategic capacities of systemic risk EWSs. Tactically, macroprudential applications are founded on information about the level, structure, and institutional drivers of systemic financial stress and aim to manage the financial system risk and imbalances in two dimensions: across time and institutions. Time-related EWS policy applications are analyzed in pursuit of prevention and mitigation. EWS applications across institutions are considered via common exposures and interconnectedness. Care must be taken in the calibration of macroprudential applications, given their reliance on quality of the underlying systemic risk-modeling framework.
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Financial Stress Index: A Lens for Supervising the Financial System	December, 2012	Federal Reserve Bank of Cleveland, working paper no. 12-37	Stephen J Ong; Timothy Bianco; Dieter Gramlich; Mikhail V Oet;	Working Papers
	Abstract: This paper develops a new financial stress measure (Cleveland Financial Stress Index, CFSI) that considers the supervisory objective of identifying risks to the stability of the financial system. The index provides a continuous signal of financial stress and broad coverage of the areas that could indicate it. The construction methodology uses daily public market data collected from different sectors of financial markets. A unique feature of the index is that it employs a dynamic weighting method that captures the changing relative importance of the different sectors of the financial system. This study shows how the index can be applied to monitoring and analyzing financial system conditions.
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The Cleveland Financial Stress Index: A Tool for Monitoring Financial Stability	2012-04	Stephen J Ong; Timothy Bianco; Mikhail V Oet;	Economic Commentary
	Abstract: To promote stability in a dynamic financial system, supervisors must monitor the system for risks at all times. The Cleveland Fed has developed an index of financial stress, the CFSI, which is designed to track distress in the financial system as it is building. The CFSI will help financial system supervisors monitor and understand the state of financial markets on a real-time basis, and take appropriate regulatory or supervisory action as necessary.
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The Financial Stress Index: Identification of Systemic Risk Conditions	November, 2011	Federal Reserve Bank of Cleveland, working paper no. 11-30	Stephen J Ong; Timothy Bianco; Ryan Eiben; Dieter Gramlich; Mikhail V Oet;	Working Papers
	Abstract: This paper develops a financial stress index for the United States, the Cleveland Financial Stress Index (CFSI), which provides a continuous signal of financial stress and broad coverage of the areas that could indicate it. The index is based on daily public-market data collected from four sectors of the financial markets—the credit, foreign exchange, equity, and interbank markets. A dynamic weighting method is employed to capture changes in the relative importance of these four sectors as they occur. In addition, the design of the index allows the origin of the stress to be identified. We compare the CFSI to alternative indexes, using a detailed benchmarking methodology, and show how the CFSI can be applied to systemic stress monitoring and early warning system design. To that end, we investigate alternative stress-signaling thresholds and frequency regimes and then establish optimal frequencies for filtering out market noise and idiosyncratic episodes. Finally, we quantify a powerful CFSI-based rating system that assigns a probability of systemic stress to ranges of CFSI outcomes.
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SAFE: An Early Warning System for Systemic Banking Risk	November, 2011	Federal Reserve Bank of Cleveland, working paper no. 11-29	Stephen J Ong; Timothy Bianco; Ryan Eiben; Dieter Gramlich; Mikhail V Oet; Jing Wang;	Working Papers
	Abstract: This paper builds on existing microprudential and macroprudential early warning systems (EWSs) to develop a new, hybrid class of models for systemic risk, incorporating the structural characteristics of the financial system and a feedback amplification mechanism. The models explain financial stress using both public and proprietary supervisory data from systemically important institutions, regressing institutional imbalances using an optimal lag method. The Systemic Assessment of Financial Environment (SAFE) EWS monitors microprudential information from the largest bank holding companies to anticipate the buildup of macroeconomic stresses in the financial markets. To mitigate inherent uncertainty, SAFE develops a set of medium-term forecasting specifications that gives policymakers enough time to take ex-ante policy action and a set of short-term forecasting specifications for verification and adjustment of supervisory actions. This paper highlights the application of these models to stress testing, scenario analysis, and policy.
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Early Warning: Introducing the Cleveland Financial Stress Index	March, 2011	Vol. 2, No. 1	Stephen J Ong;	Forefront
	Abstract: The financial crisis has raised interest around the world in developing models that can spot the emergence of systemic risk.
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Spotting a Financial Crisis Before It Happens	May, 2010	Vol. 1, No. 2	Stephen J Ong; James B Thomson;	Forefront
	Abstract: What could we have done differently to spot—and then stop—the impending financial crisis of 2008?
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