Prometheus 6

...if the objective is to encourage prudent banking and keep Wall Street’s wizards from periodically driving financial markets over the cliff, it is imperative to devise a remuneration system for bankers that puts more of their skin in the game.

...Better regulation of mortgage markets would help avoid repeating current excesses. But more fundamental correctives are needed to curb financiers’ appetite for walking a tightrope. Some economists have suggested making their remuneration contingent on the performance of their investments over several years — releasing their compensation gradually.

Sounds reasonable. But financial executives are not the primary beneficiaries of the deregulation of the financial industry (it's not a market, it's an industry). I can't see controlling their compensation as a "more fundamental corrective" than getting the regulations right. Besides, the guys brought this crisis into existance are beyond concerns about income.

This is the Committee on Capital Markets Regulation, just announced yesterday, and only anti-civil rights organizations are named more cynically. It should be called the Committee on Capital Markets DeRegulation.

Panel of Executives and Academics to Consider Regulation and Competitiveness
By FLOYD NORRIS

A committee filled with business leaders and academics was created yesterday to consider changes in the Sarbanes-Oxley Act and other laws and regulations governing securities markets and companies, with the intention of improving competitiveness for American markets.

The group, called the Committee on Capital Markets Regulation, has no official status but the announcement of its creation included praise from Treasury Secretary Henry M. Paulson Jr., who said that the issue of American competitiveness “is important to the future of the American economy and a priority for me.”

Who are these guys?

Among the committee members are Samuel A. DiPiazza Jr., chief executive of the accounting firm PricewaterhouseCoopers, and Donald L. Evans, the former commerce secretary who is now chief executive of the Financial Services Forum, a lobbying group for major insurers, banks and investment banks. Mr. Paulson is a former chairman of the group.

There are also chief executives of DuPont, Office Depot and the CIT Group, and top officers of mutual fund companies, Lehman Brothers and the New York Stock Exchange. William G. Parrett, chief executive of Deloitte Touche Tohmatsu, another major accounting firm, is also a member, as is Ira M. Millstein, a leading corporate lawyer.

When the top level Brahmins of American Capitalism get together for the sole purpose of eliminating their personal and corporate liability for fraud, you know there's fraud being planned, and at the highest levels. The rules are purposely skewed...not just to enable the fraud but to implement it.

And THAT is where the "more fundamental corrective" is needed.