Friday, Jan 18, 2008
A risk averse attitude will swing things the other way!!!!
guardian: Merrill's Thain promises to scale back risk taking
The new boss of Merrill Lynch pledged to crack down on outlandish risks by traders today as the Wall Street brokerage plummeted to an $8.6bn (£4.35bn) year-end loss following a disastrous series of bets on sub-prime mortgages.
Posted by inbreda @ 09:34 AM (504 views) Add Comment
6 Comments
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1. cyril said...
Soon to be replaced by Merrill's Wong
2. Icarus said...
Surely the huge salaries, bonuses etc. are payment for rare management and trading skills that the bank wants to retain rather than lose them to the competition. How does this square with traders taking outlandish risks and management failing to crack down on them?
3. denzil said...
Solid words by Thain but sadly this is akin to shutting the gate after the horse has bolted, swam the channel, ran to a slaughter house to be butchered and served up to those with a taste for horse meat.
4. paul said...
... served up, seasoned, consumed, realised the horse was a diseased nag, thrown up, been taken to the doctor, diagnosed with food poisioning and currently in a semi-critical condition in Ward B.
(couldn't have put it better myself, denzil).
5. dbnazz1 said...
These are prudent words and people do think like this in the bad times. Howver when the good times return, which they will do eventually when the monster crash has worked its way out of the system, the banks will revert to there usual wreckless risk taking. I strongly suspect that it is something within the nature of traders that they take these risks and this will always be the case. the opinions of the risk managers seem to be downgraded in term of short termism. perhaps the only way to change all of this is to change the remuneration packages, whereby the large bonuses aren't earned for short term results.
6. paul said...
"perhaps the only way to change all of this is to change the remuneration packages, whereby the large bonuses aren't earned for short term results."
HERESY! HE'S A WITCH! BURN HIM cried the investment bankers. Of course it makes perfect common sense, as a few writers indicated in the FT yesterday. Banking is too important to be left to bankers basically and when it is, surprise surprise, they pursue profits and underestimate risks.
Of course they should be regulated more, but who is going to do that? Gordon Brown? The FSA? Alistair Darling?