With banks having lost half a dozen years’ profits since last August you might believe headlines which suggest that they are prepared to scale back business.
Ah, but that does miss a key point. The banks may have lost, but the bankers didn’t lose past salary and bonus pay.
So while it is inspiring to read that yet another report from Gerry Corrigan, formerly NY Fed chair, now at Goldman, has released a report as co-chair of the Counterparty Risk Management Policy Group.
“His latest report, ‘Containing Systemic Risk: The Road to Reform’ is dubbed Corrigan III because it is his third effort to reduce risks,” report Aline van Duyn and Gillian Tett in the FT.

Philip Purcell, who got the boot as CEO at Morgan Stanley a year or two back, weighs in with advice for bankers and for shareholders. When banks were partnerships, profits reigned supreme. But as corporations, they pursued short-term revenues which generated big pay and bonuses for the bankers. When big bets went bad, shareholders lost. Funny that what would have seemed merely sensible 10 years ago now sounds like deep insight – such as the value of diversified businesses that don’t rely too much on trading.

Purcell calls on the Fed and the SEC work more closely together but he also notes that banks under different regulatory regimes in England, France and Switzerland have not done any better than the Americans.

Filed under: Securities & Capital Markets, Technology, regulation, risk