Monday, 22 February 2010
AEI - A Silver Lining to the Financial Crisis
Allister Heath, Editor of CityAM (London's only financial freesheet)'s commentary this morning highlighted the above research, which highlight possible (or real) reasons for the credit crunch, namely the institutions to purchase AAA or AA rated CDOs over other assets..
Its very enlightening..but sadly still does not explain why:
1.) major banks/financial institutions, which all have their own head of risks would not point out or understand the underlying risks of shifting their capital structure in such a fundamental way!?
2.) governments and in fact the whole industry would take the AAA, and AA-rated instruments by its 'face value' when they know full well how these works??
Therefore, sadly, even with tighter regulations or Cash/Capital/outstanding liability ratios does not address this very fundamental question:
** surely, if institutions and Senior board directors take personal responsibilities and medium to long term liaibilities (of course bonuses also) is the way to go.. rather than the typical 3-6years in the rein.
This will cut through the complexity of market structural issues and also what regulations they can adhere to or bypass??
Just a thought (not even re-reading it though), hope it read ok.