Monday, June 08, 2009

Another response to my review of the book by Dr Brammertz

I have received a range of responses to my review.
Here is another:

"Hello Prabhu,

I admire and support much of what you say EXCEPT the thought that the Chairmen, CEO’s, etc. had “an insufficient idea of what is on their own accounts.” ALL of them knew exactly the risks that were being taken, the effect on their balance sheets, etc. To say otherwise is ridiculous as they all saw the bonuses that were being paid for the risks that were being taken…. And loved the appreciation in the value of their stocks.

The concept of greater regulation is admirable, but every system man has created, men have found a way around. I remain unconvinced that more regulation is a good idea, vis-à-vis improved scrutiny/review of what is being done under existing regulations (e.g., Madoff). Too much government, in my opinion, is still a bad idea and it is naïve to believe that it will help CEO’s, regulators, etc. Recent history would suggest that under existing regulations UNTIL the excess is unmistakable. I cannot imagine a government run GM surviving…look at our Defense Department, NASA or Homeland Security….!!

I understand the desire for transparency, but once again, at what cost, especially if it will require publication and distribution to shareholders, SEC, etc.??? I seriously doubt that the mound of material which is published and distributed, at very significant cost, to shareholders under existing SEC, NYSE, etc. regulations are looked at by 2% and read by 1/100 of 1% of the recipients. I am told that those clients to whom Madoff sent confirms would have recognized the fraud by reading what he sent them…including many of his “feeder funds.” Perhaps, the best answer is to require distribution to anyone who requests and pays a nominal fee. Then, those that want and believe they will understand it can get it.

“A Retired CFO in the USA” Sphere: Related Content

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