Investment Initiatives

05.30.10

Is Corporate Governance a ‘Religion?’

Posted in Blog at 2:40 pm

A consultant raised the question on the LinkedIn network, “Are Corporate Governance Ratings more like Religion than Science?”  He linked to a number of studies which purported to indicate that governance ratings can be capricious or arbitrary, and I had the impression that the goal of the exercise was to debunk the role of governance rating services.  The methodology of many of the studies cited was somewhat suspect, and while I have never doubted that there is a great deal of arbitrary judgment Read more [...]

04.30.10

The Goldman Sachs Defense

Posted in Blog at 11:48 am

The following exchange on the website LinkedIn was stimulated by a question posed by the sales manager for an Indian securities firm, “What are the three most essential skills of an equity sales person?”  The question was posted on April 28, 2010, at the time of the acrimonious Congressional hearings on Goldman, Sachs’ alleged misbehavior in marketing a CDO that was deliberately designed, at the request of a Goldman client, as a shorting vehicle, without telling purchasers of the security Read more [...]

04.21.10

Letter to the National Review re Need for Financial Regulation

Posted in Blog at 1:23 pm

It should be incumbent upon conservatives to push for the right kind of regulation, even if this gives Washington some new powers. The worst financial power the Government has right now is their ability to get in bed with a handful of giant banks in a corporatist muddle of interests, as one set of barons might deal with another. Only by modifying the system can we reduce the risk of that. Read more [...]

04.20.10

The Toyota Disaster and Japanese Governance

Posted in Blog at 5:31 pm

Corporate governance is a risk factor, not a profit factor. It doesn't do anyone much good to defend one's governance practices by pointing to the track record. The point is to protect your company against what might go wrong in the future, both foreseeable risks, such as management succession issues and yes, product recalls, and the ‘Black Swans’ you can’t even envision. Toyota wasn't doing that, couldn’t respond properly when such an issue arose, and a major marketing disaster was the result. Read more [...]

04.01.10

Glass-Steagall Re-revisited

Posted in Blog at 1:28 pm

Through most of the history of this saga of burdensome regulation and artificial barriers, the American banks remained some of the most highly-rated and most profitable in the world, with higher returns on assets and larger market capitalizations than most of their foreign counterparts. One question still troubles me: What were they all whining about, and why should we have broken our system in order to accommodate them? Read more [...]

03.01.10

Why Financial Reform is Stalled (a response to libertarians)

Posted in Blog at 1:35 pm

The mirror image of chaos isn't perfection, it's rearranged chaos. A 'perfect' free market is not going to work any better than a 'perfect' centrally-planned economy will work. You all think that if we had just been wiling to rip the Band-Aid off a little faster, life would be hunky-dory by now. It wouldn't, and you'd be out of work, too. And you and you and you and you and you . . . Read more [...]

02.26.10

The Citizens United Decision and Corporate Governance

Posted in Blog at 2:29 pm

Currently, corporations already find plenty of ways to buy influence through encouraging contributions by their employees and other means. At least with explicit corporate funding there would be something openly done with corporate funds that shareholders could oppose. Read more [...]

02.19.10

Elitism, Intellectuality, and Qualification to Lead

Posted in Blog at 1:48 pm

Michael Knox Beran, a contributing editor to City Journal, wrote a piece for the National Review, entitled, “Palin Populism,” which made the point that our élite is too enamored of its academic achievements, and not enough with the moral sanity often expressed under the rubric of ‘common sense.’  I agreed, but felt that he was conceding too much territory to anti-intellectualism.  The issue is also relevant to corporate governance, since many business leaders are chosen from among an élite, Read more [...]

01.27.10

Proprietary Trading and Financial Reform

Posted in Blog at 2:36 pm

Is it really necessary for banks to assume so much risk on behalf of their clients that the hedging of said risk would constitute such a large portion of their activity as to permit them to hide proprietary trading within it? In my experience, a great deal of what banks do for clients is (a) immediately sterilized, or (b) laid off upon other clients, or (c) grossly exaggerated. Banks don't "risk" much on behalf of clients, although they may speculate in parallel with them, or even against them. Read more [...]

01.23.10

Is Proprietary Trading Essential to Banking Customers?

Posted in Blog at 2:43 pm

When the big Wall Street firms, already riven with conflicts, began to merge with other financial organizations, and later with commercial banks, they always made sales pitches to us as investing institutions, telling us how their increased capital base could be put to work in our behalf as brokerage clients. They made the same pitch to their corporate clients. Twenty-five years on, clients are still waiting to find out how this increased capital will help them. Read more [...]