Sunday, December 23, 2012

Gretchen Morgenson's guide to better business behavior

In her NY Times column, Gretchen Morgenson lists four ways to improve business behavior:

  • Make it Sting;
  • Wake up the Regulators;
  • Solve the Rating Mess; and 
  • Make Leaders Lead.
Waking up the regulators and solving the rating mess actually go together and Ms. Morgenson describes how to achieve both:
Why not ensure that investors get all the information they need to conduct extensive due diligence before agreeing to buy complex securities [like structured finance securities or bank bonds and stocks]? 
This may be the only way to blunt the [regulators' and] credit ratings agencies’ power or, better, make them disappear.
Please re-read the highlighted text as Ms. Morgenson has succinctly summarized what it takes to fix the financial system.

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