Regulation Not Enough To Reform Wall Street Reform
In the wake of the economic crisis and collapse of Wall Street, there were innumerable calls for reform of the financial industry, as well as fingers being pointed at deregulation as the evil which caused the downturn. Today, Wall Street remains a four-letter word on the campaign trail.
There have been legitimate and illegitimate criticisms of the bailout of Wall Street, but regulation would not have been enough to prevent the crisis. Years later, few individuals have gone to prison, largely because the crimes committed were unethical, rather than illegal, in nature.
Congress and the Obama administration responded by pushing a multi-thousand page bill, Dodd-Frank, that was supposed to rid the industry of bad actors.
The problem is that regulation alone is not going to root out unethical behavior, writes William D. Cohan, an author and former senior mergers and acquisitions banker.
Cohan says the first step is to realize financial services is an industry like no other.
Wall Street is not like other industries. As repulsive as it is that executives at Volkswagen sought to evade United States’ emission standards, that deceit is not likely to bring down the world’s economy. For example, when there is corruption in the auto or any other industry, the ramifications are, to an extent, are confined to that sector of the economy.
“But when things go wrong on Wall Street, the consequences can be devastating for the rest of us. On Wall Street, contagion is a real problem,” says Cohan, who says regulation is not the cure-all for bad behavior.
“Two things still need to change on Wall Street for there to be meaningful reform. First, the culture of what constitutes success inside a Wall Street firm – who gets promoted and put in charge and for what reasons — needs to change. Second, the compensation system needs a total revamp so that bankers, traders and executives are no longer rewarded for taking big risks with other people’s money, putting themselves in a position to win big if their risk-taking pays off but not to be held accountable if things go wrong,” he adds.
The Rise Of The New Global Superpower – Metanational Companies Foreign Policy magazine examines the emergence and dominance in the global economy of large firms that wield incredible power and international reach. The statistics tell the story of just how powerful some of the best-known companies are in a world governed by global trade.
For example, Apple holds more cash on hand than the gross domestic products of two-thirds of the world’s countries, while the 10 biggest banks still control almost 50 percent of assets under management worldwide.
“The world is entering an era in which the most powerful law is not that of sovereignty but that of supply and demand. As scholar Gary Gereffi of Duke University has argued, denationalization now involves companies assembling the capacities of various locations into their global value chains. This has birthed success for companies, such as commodities trader Glencore and logistics firm Archer Daniels Midland, that don’t focus primarily on manufacturing goods, but are experts at getting the physical ingredients of what metanationals make wherever they’re needed.,” says reporter Parag Khanna.
Khanna takes a closer look at the Top 25 Global Companies, where they are based, and how much wealth they hold.
The Double-Edged Sword Of Connectivity – Book Review
The Silicon Valley revolution has resulted in the amazing transformation of how we do business, interact with each other, and obtain the basic necessities of life. While there is no questioning the dominance of the US in terms of technological development in the fields of hardware and software, a new book examines the other side of the coin – our unique vulnerability that results from ever-increasing levels of dependence on being connected.
In his new book, “Hacked World Order,” author Adam Segal describes a world in which global superpowers are waging war with and at small powers and groups aimed at undermining and upending the system.
“In the past few years, the Internet has become a highway for economic espionage; a path to steal critical defense and security secrets; a tool for coercion and information warfare; and a place to lay the groundwork for potentially far more destructive cyberattacks on critical infrastructure should real war break out. Mr. Segal’s book is a compendium of all the various ways that these phenomena are playing out among the United States, China, Russia, Europe, Israel and nonstate actors like Islamic State and al Qaeda,” writes Gary Schmitt of the American Enterprise Institute in his review of the book.
Segal, who works at the Council on Foreign Relations, spoke with Fox Business Radio earlier this year about the battle over privacy between the FBI and Apple. His book was released last month and is available for purchase on Amazaon.