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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Cogito who wrote (61520)	4/24/2008 2:42:35 PM
From: TimF	Respond to of 542129

The people at the banks had (and have) a strong motive to continue to underestimate the risks The companies do not, because they face the risk of billions. The individuals may, because if they outperform massively in one year, they get huge bonuses, that don't go back to the company when the investments fail the next year. That suggest working on some way to more closely align the interests of the agents, with the interests of their principles. But I don't think that's the type of thing the government should take the lead on. One possibility would be to have bonuses differed and based on longer run profitability, but in practice that might be complicated, and I wouldn't suggest it as a universal solution. I would like to see all sorts of ideas tried, not one mandated from above. That's why financial markets don't do an especially good job of regulating themselves. They don't necessarily do such a good job, but neither does government, esp. when you get past simple basic rules of the road, and try to actively control for all sorts of uncertain shifting risks.