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Overview
Taking financial risks is an essential part of what banks do, but there s no clear sense of what constitutes responsible risk. Taking legal risks seems to have become part of what banks do as well. Since the financial crisis, Congress has passed copious amounts of legislation aimed at curbing banks risky behavior. Lawsuits against large banks have cost them billions. Yet bad behavior continues to plague the industry. Why isn't there more change?
In "Better Bankers, Better Banks, " Claire A. Hill and Richard W. Painter look back at the history of banking and show how the current culture of bad behavior dramatized by the corrupt, cocaine-snorting bankers of "The Wolf of Wall Street "came to be. In the early 1980s, banks went from partnerships whose partners had personal liability to corporations whose managers had no such liability and could take risks with other people s money. A major reason bankers remain resistant to change, Hill and Painter argue, is that while banks have been faced with large fines, penalties, and legal fees which have exceeded one hundred billion dollars since the onset of the crisis the banks (which really means the banks shareholders) have paid them, not the bankers themselves. The problem also extends well beyond the pursuit of profit to the issue of how success is defined within the banking industry, where highly paid bankers clamor for status and clients may regard as inevitable bankers who prioritize their own self-interest. While many solutions have been proposed, Hill and Painter show that a successful transformation of banker behavior must begin with the bankers themselves. Bankers must be personally liable from their own assets for some portion of the bank s losses from excessive risk-taking and illegal behavior. This would instill a culture that discourages such behavior and in turn influence the sorts of behavior society celebrates or condemns.
Despite many sensible proposals seeking to reign in excessive risk-taking, the continuing trajectory of scandals suggests that we re far from ready to avert the next crisis. Better Bankers, Better Banks is a refreshing call for bankers to return to the idea that theirs is a noble profession.
Editorial Reviews
- A thoughtful, modern exploration of a pernicious problem: excessive risk-taking in banking. "Better Bankers, Better Banks" offers an original and path-breaking perspective to the problem, including a brave remedy to reestablish professionalism and personal liability.--Steven Davidoff Solomon, University of California, Berkeley
- Hill and Painter have the historical sensibility, financial and legal competence, and literary skill to elaborate the most important, unanswered question facing contemporary banking: How best to curb the individual and institutional corruption that has emerged over the past decade? Their answer, carefully laid out with all its merits and potential criticisms, is rooted in the sensible notion that 'responsible' banking can be best served when senior bankers are held personally liable for a portion of their banks' debts, fines, and settlements. This is not as easy a remedy as it might seem, and the authors take the reader through all the fascinating details of this seemingly intuitive proposal. This is a provocative book. It will interest the general public, Congress, and concerned regulators, as well as many bank executives who are currently at work redefining what responsible banking means for their organizations and trying to induce constructive changes in corporate culture.--Malcolm S. Salter, Harvard Business School
- Why have bankers so often behaved so badly? Two eminent legal scholars lead us on a grand tour of recent financial catastrophes to demonstrate how a shift in legal structure from partnership to corporate form transformed staid banking institutions into unscrupulous gambling houses. The cultural shift occurred once bankers realized how to impose downside risk on shareholders while still retaining upside gains through lavish compensation packages. Fortunately, the authors diagnosis comes with a cure personal liability. Instead of allowing bankers to hide behind entity shields, the authors prescribe 'covenant banking, ' a form of contractually imposed personal liability, as a means of aligning banker behavior with socially optimal risk-taking. This is a compelling policy proposal, cogently presented. --Sean Griffith, coauthor of Ensuring Corporate Misconduct: How Liability Insurance Undermines Shareholder Litigation
- The change in the financial community over the past few decades has been dramatic. The economic crisis brought the activities of investment bankers into the limelight, and suddenly it seemed the staid buttoned-up banker types of the popular imagination had been transformed into wild speculators risking billions on a single trade. What happened? According to Hill and Painter, the reason is that the billions they re risking on a single trade aren't their own but somebody else s. Hill and Painter want to do something about it by requiring that financial operators have their own assets at stake. --Glenn Reynolds USA Today (11/05/2015)
About the Author
Claire A. Hill is professor and the James L. Krusemark Chair in Law at the University of Minnesota Law School, where she is also director of the Institute for Law and Rationality and associate director of the Institute for Law and Economics.
Richard W. Painter is the S. Walter Richey Professor of Corporate Law at the University of Minnesota Law School. He is the author of several books, including, most recently, "Getting the Government America Deserves" and has served as Associate Counsel to the President in the White House Counsel s office.
Product Details
Author: Claire A. Hill , Richard W. Painter
ISBN: 022629305X
Publisher: University of Chicago Press
Publish Date: October 19, 2015
Pages: 288 pages
Dimensions: 1.1" H x 9.1" L x 6.1" W (1.25 lbs)
Better Bankers, Better Banks: Promoting Good Business Through Contractual Commitment
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ISBN: 1453759220
Publisher: Createspace
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Overview
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The International Papers in Political Economy (IPPE) series explores the latest developments in political economy. This sixth volume focuses on the theme of the need for and the development of Keynesian economic policies for the 21st century. The volume deals with financial systems and economic development and asks whether we are all Keynesians now. Keynesian growth theory in the 21st century along with economic policies thought to emerge from the theoretical framework that underpins it - always a Keynesian one but adapted to the realities of the 21st century - are also examined. Essays in this volume also explore the nature and consequences of financialisation as perceived by Keynesians, the conceptualization of money and the implications for economic policy of the current financial crisis, and the role of banks and the case for public banks.
This book offers detailed analysis and informed comment on the type of economic policies that are relevant for the 21st century in the aftermath of the financial crisis and global recession. It is essential reading for all postgraduates and scholars looking for expert discussion and debate of the issues surrounding economic policy issues.
About the Author
PHILIP ARESTIS is University Director of Research, Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK. He is also Professor at the Department of Applied Economics V, University of the Basque Country; Distinguished Adjunct Professor of Economics, University of Utah, US; Senior Scholar, Levy Economics Institute, New York, US; Visiting Professor, University of Leeds, UK; and Professorial Research Associate School of Oriental and African Studies (SOAS), University of London, UK. He has published as sole author or editor, as well as co-author and co-editor, a number of books and papers in academic journals.
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Product Details
Author: Malcolm Sawyer, Philip Arestis
ISBN: 0230236014
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Published in February 1936, it sought to bring about a revolution, commonly referred to as the "Keynesian Revolution," in the way economists thought - especially in relation to the proposition that a market economy tends naturally to restore itself to full employment after temporary shocks. Regarded widely as the cornerstone of Keynesian thought, the book challenged the established classical economics and introduced important concepts such as the consumption function, the multiplier, the marginal efficiency of capital, the principle of effective demand and liquidity preference.
The central argument of The General Theory is that the level of employment is determined, not by the price of labour as in neoclassical economics, but by the spending of money (aggregate demand). Keynes argues that it is wrong to assume that competitive markets will, in the long run, deliver full employment or that full employment is the natural, self-righting, equilibrium state of a monetary economy. On the contrary, under-employment and under-investment are likely to be the natural state unless active measures are taken. One implication of The General Theory is that a lack of competition is not the fundamental problem and measures to reduce unemployment by cutting wages or benefits are not only hard-hearted but ultimately futile.
Product Details
Author: John Maynard Keynes
ISBN: 1492844756
Publisher: Createspace
Publish Date: September 28, 2013
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This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work was reproduced from the original artifact, and remains as true to the original work as possible. Therefore, you will see the original copyright references, library stamps (as most of these works have been housed in our most important libraries around the world), and other notations in the work. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work.As a reproduction of a historical artifact, this work may contain missing or blurred pages, poor pictures, errant marks, etc. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
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Author: John Maynard Keynes
ISBN: 1297522427
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A tour de force of historical reportage, "America s Bank" illuminates the tumultuous era and remarkable personalities that spurred the unlikely birth of America s modern central bank, the Federal Reserve. Today, the Fed is the bedrock of the financial landscape, yet the fight to create it was so protracted and divisive that it seems a small miracle that it was ever established.
For nearly a century, America, alone among developed nations, refused to consider any central or organizing agency in its financial system. Americans mistrust of big government and of big banks a legacy of the country s Jeffersonian, small-government traditions was so widespread that modernizing reform was deemed impossible. Each bank was left to stand on its own, with no central reserve or lender of last resort. The real-world consequences of this chaotic and provincial system were frequent financial panics, bank runs, money shortages, and depressions. By the first decade of the twentieth century, it had become plain that the outmoded banking system was ill equipped to finance America s burgeoning industry. But political will for reform was lacking. It took an economic meltdown, a high-level tour of Europe, and improbably a conspiratorial effort by vilified captains of Wall Street to overcome popular resistance. Finally, in 1913, Congress conceived a federalist and quintessentially American solution to the conflict that had divided bankers, farmers, populists, and ordinary Americans, and enacted the landmark Federal Reserve Act.
Roger Lowenstein acclaimed financial journalist and bestselling author of "When Genius Failed" and "The End of Wall Street" tells the drama-laden story of how America created the Federal Reserve, thereby taking its first steps onto the world stage as a global financial power. "America s Bank" showcases Lowenstein at his very finest: illuminating complex financial and political issues with striking clarity, infusing the debates of our past with all the gripping immediacy of today, and painting unforgettable portraits of Gilded Age bankers, presidents, and politicians.
Lowenstein focuses on the four men at the heart of the struggle to create the Federal Reserve. These were Paul Warburg, a refined, German-born financier, recently relocated to New York, who was horrified by the primitive condition of America s finances; Rhode Island s Nelson W. Aldrich, the reigning power broker in the U.S. Senate and an archetypal Gilded Age legislator; Carter Glass, the ambitious, if then little-known, Virginia congressman who chaired the House Banking Committee at a crucial moment of political transition; and President Woodrow Wilson, the academician-turned-progressive-politician who forced Glass to reconcile his deep-seated differences with bankers and accept the principle (anathema to southern Democrats) of federal control. Weaving together a raucous era in American politics with a storied financial crisis and intrigue at the highest levels of Washington and Wall Street, Lowenstein brings the beginnings of one of the country s most crucial institutions to vivid and unforgettable life. Readers of this gripping historical narrative will wonder whether they re reading about one hundred years ago or the still-seething conflicts that mark our discussions of banking and politics today.
Editorial Reviews
- Library Journal Prepub Alert 05/01/2015 pg. 52 (EAN 9781594205491, Hardcover)
- Kirkus Reviews 08/01/2015 (EAN 9781594205491, Hardcover)
- Publishers Weekly 08/17/2015 (EAN 9781594205491, Hardcover) - *Starred Review
- Library Journal 09/15/2015 pg. 86 (EAN 9781594205491, Hardcover)
- New York Times Book Review 10/25/2015 pg. 1 (EAN 9781594205491, Hardcover)
- New York Times Book Review 11/01/2015 pg. 26 (EAN 9781594205491, Hardcover)
About the Author
Roger Lowenstein is a financial journalist and writer. He graduated from Cornell University and reported for the "Wall Street Journal" for more than a decade. Lowenstein is the author of a number of books and articles, including "The End of Wall Street", "Origins of the Crash: The Great Bubble and Its Undoing", and "Buffett: The Making of an American Capitalist"
Product Details
Author: Roger Lowenstein
ISBN: 1594205493
Publisher: Penguin Press
Publish Date: October 20, 2015
Pages: 368 pages
Dimensions: 1.3" H x 9.3" L x 6.3" W (1.25 lbs)
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