{"id":497694,"date":"2010-03-31T18:10:10","date_gmt":"2010-03-31T22:10:10","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/03\/31\/straight-shooting-volcker-takes-aim-at-bank-management\/"},"modified":"2010-03-31T18:10:10","modified_gmt":"2010-03-31T22:10:10","slug":"straight-shooting-volcker-takes-aim-at-bank-management","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/497694","title":{"rendered":"Straight-Shooting Volcker Takes Aim at Bank Management"},"content":{"rendered":"

At a session on financial sector governance, former Federal Reserve<\/strong> Chairman Paul Volcker<\/strong> said that bank directors weren\u0092t mainly responsible for the bad decisions made by financial firms\u0097 management was.<\/p>\n

Part of the problem is that top managers are paid too much, he told a conference organized by the Center for Strategic and International Studies<\/strong>, so changing incentives doesn\u0092t make a big difference. \u0093If you\u0092re making $20 million a year, it doesn\u0092t matter if you spread it out over one year, three years or five years,\u0094 or have provisions to claw back some of the pay later on.<\/p>\n

Part of the problem is that top managers are too frequently blind to the moral dimension of their jobs. He derided the idea that \u0093the more you make, the more qualified you are.\u0094<\/p>\n

\u0093There\u0092s a loss of pure pride in profession,\u0094 Mr. Volcker said.<\/p>\n

Another part of the problem is the complexity of the instruments financial firms peddle and the decisions they make. \u00a0Directors are often at a loss to keep up, he said. Mr. Volcker recommended that boards hire groups of experts to advise them on new products, mergers and other issues, though he doubted that most companies would approve the expense.<\/p>\n

\u0093Management will reject it,\u0094 he said. \u0093They don\u0092t want alternative sources\u0094 of expertise.<\/p>\n

Another recommendation: don\u0092t let corporate compensation experts advise board compensation committees. Invariably, Mr. Volcker said, the experts recommend paying top managers higher than the average for the industry.<\/p>\n

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At a session on financial sector governance, former Federal Reserve Chairman Paul Volcker said that bank directors weren\u0092t mainly responsible for the bad decisions made by financial firms\u0097 management was. Part of the problem is that top managers are paid too much, he told a conference organized by the Center for Strategic and International Studies, […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-497694","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/497694","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=497694"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/497694\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=497694"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=497694"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=497694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}