Wednesday, January 16, 2008

Banks need more regulation

Some of my best friends are bankers

Martin Wolf of the FT writes "By paying huge bonuses on the basis of short-term performance in a system in which negative bonuses are impossible, banks create gigantic incentives to disguise risk-taking as value-creation. Yet individual institutions cannot change their systems of remuneration on their own, without losing talented staff to the competition. So regulators may have to step in. The idea of such official intervention is horrible, but the alternative of endlessly repeated crises is even worse. I understand that the bankers will not like this. Yet one thing is surely now quite clear: just as war is too important to be left to generals, banking is too important to be left to bankers, however much one may like them." I agree, banks played big part in our hp bubble.

Posted by happyrenterz @ 12:36 PM (936 views)
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9 thoughts on “Banks need more regulation

  • some of my best friends are w*nkers…

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  • w*nking is too important to be left to w*nkers.

    That’s why the government got involved.

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  • Perhaps they should consider some of their own advice – past performance is no guarantee of future returns.
    These talented staff who might defect to another bank might be nothing of the sort. They could indeed just have been lucky for a while and could just as easily have screwed up. Might as well let them go somewhere else and give someone else a go at spinning the wheel.

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  • Two problems with MW’s idea. (1) There is so much money to be made from driving credit-creation and asset bubbles that it is very difficult to stop and (2) the banks are only a part of the problem; credit is created by non-bank mortgage lenders, consumer credit firms, the financial arms of industrial corporations and other unregulated financial entities.

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  • An Bearin Bui says:

    This a historic article: Martin Wolf refers to “the subprime and securitised-credit crisis of 2007-08” in the same breath as the savings and loan crisis and the commercial property crash of the early 90s: make no mistake – the Great Crash is here and it’s been given a name and entered into the canon of financial crises. HPC has arrived!

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  • I like w*nking.

    Look 😉

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  • pimps and bankers a good combination…lol

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  • Note the frothing rejoinders of the bankers in the posts. And note that none attempts to refute Wolf, just slag him off. Good to know the best brains are looking after our economy.

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  • Do banks need regulation?

    Or perhaps they just don’t need a safety net.

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