naked capitalism

makarov says:

You should ask him what he thinks the penalty should be for a bank wrongfully foreclosing on a property, per incident.

Ask if he thinks creating fraudulent documents, in particular post-dated mortgage note assignments, is wrongful.

C says:

Former Citi chairman John Reed gave an interview recently with Bill Moyers. In that interview three points were made.

Firstly Mr Reed asserted that Wall Street was wrong to overtun Glass-Steengall. He went on to state that the crash of 2008, while it still may have happened, might not have posed a systemic or existential risk had things been compartmentalized.

Secondly he agrees with a claim put forward by Bill Moyers that the deck was stacked against the interests of the public:

BILL MOYERS: Well, some people now say the deck was
stacked, that the game was rigged against the broad
interest of the public.

JOHN REED: No, I definitely agree. And, I mean, the
proof is there. It doesn’t take a genius to figure out
that we’d been wrong.

Thirdly, he notes that a major source of pressure to accept and make these bad loans came from investors and the notion of “shareholder value” which pressured leaders of financial institutions to focus more on ever increasing stock values and bonuses rather than prudent investment.

How would you respond to these three points. Do you think that he is wrong in any way. And if not what are you, as one of the leading members of Wall Street, doing to change it?

Transcript here:http://billmoyers.com/segment/john-reed-on-big-banks-power-and-influence/#

Greg Taylor says:

If he’ll meet, you might start the conversation by establishing common areas of agreement about the honorable role that banking might have in the future. Then, get his perspectives on why banking has lost much of this respect over the last 30 years and what it needs to do to restore it. Then fill in the major holes in his response in a way that shows how bad banking practices have destroyed customer, counter-party and investor trust and why substantial reforms are necessary to restore honor to the profession.

Don’t be surprised if he sees fraud as a relatively minor issue and have some good stats ready that illustrate the pervasiveness of it throughout the industry.

Some other bad practices that might be worthy of discussion:

1. Not aligning banking/servicer incentives with customer and investor incentives. Not retaining a fair share of the credit risk (>25%) on the loans banks originate. Incentives for servicing fraud. Credit Default Swaps allow banks to profit from losses they can create and are invitations for fraud.

2. Creating opaque products and taking advantage of resulting information asymmetries that produce unnecessary losses for customers. Treating customers as counter-parties.

3. Securitization / Mortgage Electronic Registry System. One example of poorly aligned incentives and opaque products creating massive harm to society.

4. Allowing single banks to get so big that they hold the entire world economy hostage if they were allowed to fail. This ensures crony capitalism, bankers getting the upside profits and socializing the losses.

F. Beard says:

6) Would you like a blindfold?