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It seems like a bad way to run a bank if these kinds of large risk decisions (buying ~$80b in 10y bonds at ~1.5%) are solely driven by a few execs and the BoD,
by npunt 4y ago
It seems like a bad way to run a bank if these kinds of large risk decisions (buying ~$80b in 10y bonds at ~1.5%) are solely driven by a few execs and the BoD, while everyone else in the bank is just a drone.
If employee comp (yearly and even historic bonuses) was tied to the bank's catastrophic risk levels, I bet you'd see banks restructure their operations to curtail these kinds of catastrophic risk factors. Smart people wouldn't join banks where they didn't have a say in that. Instead, we get short-termism where the longest timeframe people care about is 'this years bonus'. Banking is too important to be that stupid.
- dasil003 4y agoI think you're misinterpreting what the GP is saying. It's an organization, and those at the top bear responsibility regardless of how decisions are made internally (and there's no way those executives are making decisions without a huge lift from the rank and file). Sure it's hard to stay on top of everything—executives are human and will make mistakes–but that's why they get paid the big bucks! At the end of the day anything short of full accountability from those at the top is a huge moral hazard and recipe for disaster.