Dealers Gain From Complexity, Customers Lose Out

March 11, 2014

Dealers Gain From Complexity, Customers Lose Out

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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