Duude

Ranting About Risk

While I believe there will be a period of re-expanding of multiples on financial firms that were most vulnerable to the subprime mess, I think over the longer run we will see a trend to discounting these firms over the longer term. Their credibility is bleak regardless of any big upturn in earnings. Those same earnings will remain suspect and should always be. These firms have shown us their power to wipe out a decade of earnings in a year. Their short-sightedness is shockingly stupid. Bonuses must have long-term strings. The department of risk management must be elevated above the mailroom. All future bonus payouts must be approved by risk management with their own jobs at risk. Internal Whistleblowers must be given a free get out of jail card by corporate heads.