Wednesday, December 9, 2009

"Wake-Up Gentleman," warns Volcker to Bankers

Whoa. Those are strong words. But I guess if Paul Volcker can't say it – Fed Chairman for years 1979 through 1986 - then I guess there are few others who can.

The WSJ organized a Future of Finance Initiative conference yesterday that brought various bankers and regulators together to discuss reform measures. The Times Online ran a great article this morning with some of the more intriguing quotes. Volcker's "wake-up" statement was in response to a discussion on executive pay, calling the bankers' response to the issue "inadequate."

Also quoted was Sir Deryck Maughan, partner in the private equity firm Kohlberg Kravis Roberts. Maughan focused on the modeling behind the financial instruments, suggesting Wall Street has not "faced up to the intellectual failure of risk management systems, which are still hardwired into many banks and many trading floors."

(As a side note, there was also an influential Baroness – and advisor to the G20 and Britain's Gordon Brown – who attended the conference and is quoted by the Financial Times. It's like a lunch meeting of an elite group of financial super heros or something.)

The George Soros was evidently also in attendance, and in fact spoke about banning credit default swaps ("CDS"), describing them as "toxic."

This stuff is great fodder for the imagination; please check the Times Online for its report.

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