Dealers Gain From Complexity, Customers Lose Out

March 11, 2014

By Vanessa Drucker, Fundweb

Clear and present dangers to the financial system still abound. For a sane and sensible summary, look at After the Music Stopped: The Financial Crisis, the Response and the Work Ahead by Alan Blinder. The Princeton professor’s arguments seem incontrovertible with 20/20 hindsight. Some topics have almost become clichés.

But they still bear repeating, especially coming from such a credible source. Blinder served as vice chairman at the Federal Reserve from 1994-1996; he can hardly be blamed for the laisser faire policies that led to excesses and distortions by 2008.

Last week, Blinder outlined his “Ten Commandments” at a presentation at the Museum of American Finance: investors’ memories are short, self-regulation does not work, control leverage, honour thy shareholders more than thy top executives, elevate risk management, hold assets on-balance sheet.

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