Hi Terry - thanks for the link. Always a pleasure to read one of Greenie's speechs.
I especially liked this part: "Being able to judge which structural model best describes the forces driving asset pricing in any particular period is itself priceless. To paraphrase my former colleague, Jerry Corrigan, the advent of sophisticated risk models has not made people with gray hair, or none, wholly obsolete. "
A kind thing to say when lauding Anna Schwartz, who still had all her hair, but was no spring chicken.
This part seems resonant with all the Enron news: "Financial institutions can respond to this disappearing advantage by endeavoring to preserve the old way of doing business--by keeping information, especially adverse information, away from the funders of their liabilities. But that, I submit, is a foolish policy that buys a dubious short-term gain with a substantial long-term cost. Moreover, inevitably and increasingly it will become more difficult to do. Whenever it becomes clear that the information coming out of an institution is somehow questionable, that institution will pay an uncertainty premium."
As for the rest of it, yes, I agree it's very interesting. I wonder what he was thinking about when he said "We have all chosen implicitly, if not in a more overt fashion, to set our capital and other reserve standards for banks to guard against outcomes that exclude those once or twice in a century crises that threaten the stability of our domestic and international financial systems. " |
