01.22.10

The Example of the European Banks

Posted in Blog at 2:52 pm

The trading mentality is inimical to the prudence necessary to run a commercial bank, and the very necessary function of significant risk-taking should be taken on by separate organizations that are not also insured and protected by governments because they accept demand deposits, clear everyday financial transactions, and serve as the gatekeepers to most everyday economic activity. Read more [...]

01.18.10

A Modest Proposal

Posted in Blog at 2:56 pm

One important aspect would, I believe, be key to changing the way institutional investors deal with the managements of companies they own: a legally enforceable duty of responsible stewardship on the part of major shareowners toward the companies they have invested in. Read more [...]

01.16.10

Reply to Robert Pozen, “A Mistake that will make banks riskier”

Posted in Blog at 11:27 pm

(The following was written in response to an opinion piece in the Financial Times on January 12th 2010, attacking the notion that a restoration of Glass-Steagall would improve the financial system.  Mr. Pozen’s remarks were also supported in a reader-submitted comment by Bevis Longstreth, who argued as well that the original Glass-Steagall Act was a mistake, because it did not address the causes of the many bank failures of the Great Depression. I did not deal with this directly, although I think Read more [...]

01.12.10

Congress’ Priorities versus the Financial System’s Needs: an exchange

Posted in Blog at 3:27 pm

Winning conservatives over to the cause of reform is where would-be reformers should concentrate their efforts. . . A totally unregulated capital market is almost a misnomer: it would be a black hole waiting to devour all its participants as soon as prices began to fall. I believe that a change in structure would be better than trying to regulate every single possible risk a market participant might ever take, and then discovering that there were new ones you hadn't known about. Read more [...]

10.29.09

Re-thinking the Structure of the City of London

Posted in Blog at 3:35 pm

Mr. Gapper's threefold division of the banks would not only be a good idea, it should be complemented by requirements that major risk-takers be risking their own wealth above all. Commercial banks can be limited-liability corporations; investment banks should be at most closely-held corporations, and active position-takers and risk traders should have to have a major unlimited partnership element to their legal structure. Read more [...]

08.04.09

From Those Wonderful Folks Who Gave You Black Monday

Posted in Blog at 1:10 am

Jerry Della Femina entitled his 1971 satiric look at the advertising industry "From Those Wonderful Folks Who Gave You Pearl Harbor".  The title came from an adman's tongue-in-cheek idea for a new campaign during a brainstorming session on behalf of the client, Panasonic.  Della Femina obviously knew that the idea of such an advertising campaign was funny because it was an outrageous parody of something characteristic of the industry.  Certainly, the attack on Pearl Harbor in 1941 is a kind of Read more [...]

07.12.09

How do we get Shareholders to Care about Governance?

Posted in Blog at 8:42 pm

The following comments were originally written in response to an online inquiry:  "What needs to happen . . . to stimulate shareholders to agitate for change at mismanaged companies?"  My reply has been stitched together from an exchange with the questioner, Alexander Krakovsky, of ContourGlobal. The cause of better corporate governance is not being pursued aggressively by fund managers because the majority of them do not believe in it. Too many investors believe in a champion CEO, who, like Read more [...]

02.25.09

Fiddling While Rome Burns

Posted in Blog at 10:47 pm

I have participated in several conferences and numerous other discussions regarding corporate governance since the spreading calamity enveloped us all last autumn, and one distressing fact keeps leaping out at me: the corporate governance debates have not adjusted at all to the fact that there has been a catastrophic failure of the economic system. People are still discussing the same sorts of palliatives, with the same lack of urgency, that they were doing when GDP growth was forecast at 3% per Read more [...]

02.23.09

Intellectuals, the Great Depression, and the Depressing Economy of 2009

Posted in Blog at 2:33 am

The Wall Street Journal just ran an op-ed piece by a literature professor entitled "Will This Crisis Produce a 'Gatsby'?" I took issue with the theme, not only because it seriously mis-used one of the great works of American literature, but also because it revealed a fundamental flaw in the thinking of American intellectuals when it comes to the American experience, the 'American Dream,' and to the common man's hopes for prosperity in general. The Great Gatsby was published in 1925. It does Read more [...]

01.30.09

Enterprise, Risk-taking, and Regulation

Posted in Blog at 1:09 am

As any aficionado of the the classic British country-house mystery can attest, there are three great wellsprings which render otherwise respectable, law-abiding individuals capable of murder. Greed is of course the primary motivator, and jealousy—especially the jealousy arising from romantic betrayal—is another. But the third, of growing importance in the evolving society of the post-World War I era, was the fear of loss of social standing in an increasingly bourgeois society. The Read more [...]