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| Time for Radical Bank Reform |
Excellent article today from Alan Kohler who references Andrew Haldane, executive director of the Bank of England. He explains the history of banking:
the risks from banking have been widely spread socially. But the returns to bankers have been narrowly kept privately. That risk/return imbalance has grown over the past century. Shareholder incentives lie at its heart. It is the ultimate irony that an asset calling itself equity could have contributed to such inequity. Righting that wrong needs investors, bankers and regulators to act on wonky risk-taking incentives at source.A shift away from remunerating bankers based on return on equity instead looking to return on assets would lead to different risk assessments by bankers and outcomes for the banks, for the bankers and for society at large.
A valuable macro perspective on our financial system. Read it here
