By Ásgeir Jónsson
The Icelandic financial crisis was very similar to the Asian crisis of 1998, or at least the part concerning the currency crisis. On both occasions you had countries that were initially favoured by international investors and received very large sums of foreign investment, which to a large extent was short-term carry trade position. [...]
by Liu Mingkang, Chairman, China Banking Regulatory Commission
The issue of wrong business models, coupled with an over-reliance on wholesale market funding, is one of the major factors contributing to the complexity and connectedness of financial institutions we are having today. In the last few decades, the culture of the financial system has shifted fundamentally from a credit based- to an equity based financial system, resulting in greater risk contagion and mismatch between markets, institutions and instruments.
by Martin Rogers
The financial crisis has forced the industry to grow up, but only real communication between banks and regulators will translate this maturity into workable solutions to structural problems.
by James Kwak
Wall Street critics often say that compensation should be in long-term restricted stock so that managers and employees do not have the incentive to take excessive risk. This myth has been exploded.
by Jon Lukomnik, IRRC Institute
Mystery shrouds the government-sponsored mega-pools of money known as sovereign wealth funds (SWFs). They are feared as potential political forces and renowned for their opacity and secrecy. But a new study by the IRRC Institute and RiskMetrics finds the real power and influence of SWFs on global equity markets to be overstated.
When five banks failed stress tests, the new central bank governor stepped in and fired the CEOs of all five banks, at the same time recapitalising them with $2.4 billion and effectively taking control of the institutions. The country: Nigeria. The time: now.
Confidence. Trust. Sentiment. Shifts in these intangible qualities were probably more of a root cause than anything else in the recent financial crisis. Until now, no serious analysis has been made of the nature of confidence in banking, and its effects on the culture of the organisations themselves. But some interesting studies are finally beginning to surface.
Despite leaders foregoing bonuses, the cost of leadership has been high. These costs include not just losses across the system in the trillions, but also the cost of finding and replacing leaders, which is magnified if the company is caught with no succession plan. This doesn’t even get into the business impact of the incubation [...]
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