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Federal Board Governor Randall Kroszner spoke to bankers and some called his remarks “scathing.” Read his remarks below and please tell me if this is ‘scathing’ or a total misconception of what bankers were doing. The problem as I see it was that profit taking and profit making failed to slam on the brakes until it was too late. Kroszner thinks it was a lack of intelligent informed information instead. Here is what he said:
“In particular cases, senior management was not fully aware of the firm’s latent concentrations to U.S. subprime mortgages. They did not realize that in addition to the subprime mortgages on their books, they had exposure to off-balance sheet vehicles holding mortgages, through claims on counterparties exposed to subprime.”
Pardon me but most professionals consider every single aspect of major decisions, including peripheral areas, before making a decision. If underlings cannot brief the Chariman and CEO properly they are relieved and replaced with some with clear thinking, insight, and the ability to see beyond the department level. If Kroszner to thinks his position is correct then perhaps he knows more than we do. However, unless risk officers and other key personnel resigned rather than being ignored or used as scapegoats perhaps he is right. Of course some CEO’s did get the axe and others are under fire. The truth is probably somewhere in the middle.
This article, Fed Reserve Board Governor Slams Bankers, is just one of our articles from our Bank Horror Stories, HSBC Secrets Part 3
Bank Horror Stories monitors banking problems and customer complaints and has done so since 1999. Writers hold no stock positions. Some material is used under the fair use copyright act.
We use Thomson Reuters News Service Calais in all production material but are not associated with Thomson Reuters, banks, or financial institutions in any way.
