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The solution the article outlines is the obvious right way, and if governments want to reduce the risk of banks this is obviously what they need to do: create l
by swombat 14y ago
The solution the article outlines is the obvious right way, and if governments want to reduce the risk of banks this is obviously what they need to do: create long-term consequences for reckless risk-taking.
Probably the biggest problem in this whole thing is the simple fact that someone can win the roulette one year and then get out of the game.
Simply require anyone in charge of huge sums of profit as a too-big-to-fail bank to be responsible for the continued health of the bank for the next 7 years. The fact the CEO can hang around for a couple of years, make a hundred million, and then go somewhere else is the root of the problem. If the bank loses billions because of a rogue trade, the CEO at the time, the current CEO, and everyone all the way down the chain of command down to the rogue trader for the intervening period should go to jail for economic crimes.
That will guarantee that banks are much more systematically cautious. Those guys don't want to go to jail.
- beagle3 14y ago> if governments want to reduce the risk of banks this is obviously what they need to do: create long-term consequences for reckless risk-taking. And they know that. But the governments work for the banks, not for the people, and thus have NO incentive to do anything about the reckless risk taking, until things become bad enough that it might lead to an uprising.
- illuminate 14y ago"this is obviously what they need to do: create long-term consequences for reckless risk-taking." Yeah, but not like this, you have to spread the culpability outward and not just lay the blame on one person at a time to "make an example". This isn't going to instill fear in any executive that encourages such behavior.