Tag Archives | financial crisis

Review: What They Do With Your Money

What They Do With Your MoneyWhat They Do With Your Money: How the Financial System Fails Us and How to Fix It

What they do with your money is central to many issues of citizens around the world. This wonderful new book by Stephen Davis, Jon Lukomnik, David Pitt-Watson helps readers connect the dots. While its focus is on the financial system, its purpose is empowering individual citizen investors and those who would be investors if that system were redesigned to serve us all.

Fixing the system won’t be easy. We can’t count on most of those those benefiting from the system to initiate needed changes but the authors provide a roadmap of how needed reforms can be accomplished. Continue Reading →

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Wayback: Five, Ten and Fifteen Years Ago in Corporate Governance

Mr. Peabodys WayBackMachine

Mr. Peabody and Sherman prepare to go back in time to visit corpgov.net 5, 10 and 15 years ago.

Five years ago in Corporate Governance

In the year-end reflections two contributing factors deserve more attention. First, “prophetic warnings” from religious groups on the dangers of subprime loans via shareowner resolutions. Second, a call from Sanford Lewis for boards to revoke implicit policies of “don’t ask, don’t tell” with regard to liability issues. (Two Overlooked Lessons From the Financial Crisis)

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Is Wall Street Capitalism Really “The Model”?

DavidEllerman

David P. Ellerman

Guest post from David P. Ellerman who works in the fields of economics and political economy, social theory and philosophy, mathematical logic, and quantum mechanics. His undergraduate degree was in philosophy at M.I.T. (’65), and he has Masters degrees in Philosophy of Science (’67) and in Economics (’68), and a doctorate in Mathematics (’71) all from Boston University. He has been in and out of teaching in economics, mathematics, accounting, computer science, and operations research departments in various universities (1970-90), founded and managed a consulting firm in East Europe (1990-2), and worked in the World Bank from 1992 to 2003 where he was an economic advisor to the Chief Economist (Joseph Stiglitz). He is currently a visiting scholar at the University of California/Riverside and a Fellow of the Center on Global Justice at University of California/San Diego.

He has published numerous articles in various fields and five books. The published and draft papers and book manuscripts, including Is Wall Street Capitalism Really “The Model,  are available on his website, David Ellerman. See also his working papers here on the SSRN site. Continue Reading →

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Review: Directors' Duties and Shareholder Litigation in the Wake of the Financial Crisis

DirectorsDutiesAndShareholderLitigationinthWakeoftheFinancialCrisis

Joan Loughrey

Joan Loughrey

This timely book, edited by Joan Loughrey, brings together academics and practitioners to assess the efficacy of directors’ duties, or lack thereof, regarding shareholder litigation in the wake of the financial crisis. Although primarily focused on the UK and the Companies Act of 2006, the part played by the US and its regulatory scheme is not ignored. Americans reading the book will benefit from a better understanding of the UK framework and how portions may or may not apply here.

For example, the UK Code of Corporate Governance makes boards responsible for determining the nature and extent of the risks that companies should undertake. Yet, even in the wake of extreme circumstances and huge financial losses, Continue Reading →

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2013 Millstein Forum – Keynote Speaker: Sheila Bair

Sheila Bair

Sheila Bair

The following are cryptic notes and a photo taken at the 2013 Millstein Forum held June 24 & 25 at Columbia Law School. Be sure to check out the Forum’s photo gallery. I was probably paying more attention to my table-mates than the speaker but decided to post my note and an extensive interview conducted by Bill Moyers.

BofA wasn’t required to take over Countrywide. Regional banks performed better. People need to ask questions. Boards need to understand risks. Key problem was leverage. Borrowing $30 for every $1 of equity. International standard for  leverage was 3%, now going to 6%. FDIC will take control of the holding company and will support the banks through default. Recapitalize from bond. Need to make sure there is plenty of secured(?) debt at holding company. Set debt requirements to give us better market discipline. Bond holders will put on more pressure. Continue Reading →

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Beyond Growth: Do Corporations Have Any Responsibility to Ensure Growth Helps the Majority?

Martin Hart-Landsberg

The following guest post is from Martin Hart-Landsberg, PhD who blogs at Reports from the Economic Front. I’m republishing his post (I added the subtitle to his Beyond Growth) because I believe those concerned with corporate governance need to look at corporations in context. Are corporations helping society or adding to its burdens?

Cross-posted at Reports from the Economic Front.

While newspapers give a lot of ink to arguments about whether reducing the budget deficit will boost or reduce growth, they seem to have little interest in the related issue of whether economic growth really benefits the great majority. Continue Reading →

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Breaking Up is Hard to Do

Trillium Asset Management LLC, on behalf of the Benedictine Sisters of Mount St. Scholastica, along with the AFSCME Employees Pension Plan recently filed a shareholder proposal with Citigroup Inc. (NYSE: C, $C) asking the company’s board of directors to explore a possible separation of one or more of its business units. Continue Reading →

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Book Review: Owning Our Future

Marjorie Kelly is the rarest of authors, discussing some of the most difficult problems we face but doing so through an easily understood narrative of her own search for answers that is bound to draw in readers from a wide variety of backgrounds. Her analysis is insightful and the recommendations contained in Owning Our Future: The Emerging Ownership Revolution should strike a chord with most, regardless of their political persuasion. We all want a better future for our children. Kelly is pointing in the right direction to make that happen. Continue Reading →

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United States of America v. Carollo, Goldberg and Grimm: Mafia Tactics on Wall Street

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won’t hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you’re probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government’s massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony “Tony Ducks” Corallo. Continue Reading →

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Guest Post: The High Cost of ERM Herd Mentality

Enterprise Risk Management (“ERM”) as a movement has been around for more than a decade.  Unfortunately, a 2010 COSO survey disclosed that only limited progress has been made convincing senior management and boards that ERM is key to maximizing and safeguarding long term enterprise value, allocating expensive human and financial resources,  or managing major risks to strategic and core business objectives. Continue Reading →

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Review: Corporate Governance and the Global Financial Crisis

Corporate Governance and the Global Financial Crisis: International Perspectives by William Sun, Jim Stewart, and David Pollard addresses the worldwide crisis that cost Americans an estimated average of $188,000 per household. We will be paying back that debt for decades… or perhaps more accurately, our children will be paying back that debt. Yes, we’ve passed the usual spate of laws after a financial crisis and regulations are still being written, but almost nobody I talk to, except perhaps those on Wall Street, thinks we have solved the issues. This book discusses some of the weaknesses, such as executive pay, risk management, board practices, regulation capture, the failure of shareowners to obtain and/or exercise rights, etc. Perhaps more importantly, many of the contributing scholars offer possible solutions. Continue Reading →

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Review: Economic Governance Matters

Does Economic Governance Matter?: Governance Institutions and Outcomes edited by Mehmet Ugur and David Sunderland. The answer is an unqualified yes! More questionable is if citizens can shape governance to be more efficient to society as a whole.

It does not require immense imagination to see that technically-feasible economic outcomes may remain socially-unfeasible if the existing definition of property rights is not credible due to the existence of a highly intrusive or excessively weak Continue Reading →

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Complexity Theory & Corporate Governance Failures

Catching up on a couple of noteworthy reviews from recent issues of Corporate Governance: an International Review.

Corporate Governance and Complexity Theory by Marc Goergen, Christine Mallin, Eve Mitleton-Kelly, Ahmed Al-Hawamde and Iris Hse-Yu Chiu.  Reviewer Diane Denis was hoping the application of complexity theory would lead to insights concerning how and where problems arise, allowing corporations to manage more effectively. Instead, according to Denis, the authors use complexity theory to advocate stakeholder governance. Like other such efforts, they fail to Continue Reading →

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Science of Stock Manipulation

Unless current shareowners suffer a penalty for having CEOs who engage in earnings manipulation and insider trading they are likely to encourage such unethical and damaging behavior, finds a study by Ramy Elitzur, since choosing less ethical managers may be in the best interests of current shareholders, but not future ones.

Many accountants believed that markets are efficient and as such, Continue Reading →

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“Then I realized that, ‘Wow! I didn’t get in trouble!’ So I played it again.”

Renowned Hawaiian musician and guitarist Makana was invited to play instrumental background music at the APEC Summit gala dinner Saturday night here in Honlulu. At the dinner, Makana opened his jacket to reveal a t-shirt which read, “Occupy with Aloha.”

Then, instead of performing the background instrumental he was scheduled to play, he started to sing a protest song he had released earlier that day. As world leaders, including Obama and Chinese Premier Hu Jintao, sat in the Continue Reading →

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Occupy Suburbia: 99% @ Rte 99

I live in Elk Grove, California, a suburban enclave of Sacramento… if not middle America, at least middle California. Its a town where most kids are driven to school and soccer in minivans or SUVs. Most are too busy with their daily lives and trying to hold on to underwater mortgages to join ‘occupy’ movements in Sacramento or San Francisco. That doesn’t mean the movement has been completely ignored.

There was a post on the Elk Grove Patch and another on Elk Grove News.net.  News.net didn’t get much traction but the Patch attracted a Continue Reading →

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Sacramento Kings: Dear & Ailman

Nice play on words by ai-cio.com on the title of their article, Sacramento’s Kings, interviewing two of the most influential chief investment officers in America: Chris Ailman of the California State Teachers’ Retirement System (CalSTRS) and Joe Dear of the California Public Employees’ Retirement System (CalPERS). Of course, Sacramento is also home (perhaps temporarily) to the Sacramento Kings NBA team. In the scheme of things, Dear & Ailman seem a lot more important to me.

Interviews are wide ranging. CalSTRS is interested in getting into commodities. It sounds as if both funds are being held back from managing even more of their funds internally than they currently do by pay limitations on government employees… politically infeasible to pay what market would demand. Good discussion of risk analysis. Article is worth a quick read if you deal with either fund.

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Occupy Wall Street

The NY Transit Workers Union (TWU) Local 100 voted to join the protestors in the financial District of New York City, and so have the Verizon union members. Other unions, including the Teamsters (yes, those Teamsters who once supported Ronald Reagan) have issued public statements of support for Occupy Wall Street (OWS) protests… includes video of Tony Bologna pepper spraying. (“Occupy Wall Street” Is Getting Huge — But Where Are the Democratic Politicians?, AlterNet)

The young heroes on Wall Street today baffle the world because they have issued no demands. The villains of Wall Street had their demands — insisting upon a massive bailout for themselves in 2008, while they pocketed million dollar bonuses. The Wall Street protesters are not seeking a bailout for themselves; they are working to bail out democracy. (Van Jones, Wall Street Protests: Which Side Are You On?, Huffington Post, 9/30/2011)

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