Bank capital and short
Markopolos Canada Goose Coats On Sale eyes a fortune from BNY whistleblowing
Goldman was able to make long term greedy work because, in the view of those working there at the time, that was the best kind of cheap canada goose uk greedy they could get their hands on. Burning clients wasn so much wrong as canada goose factory sale stupid
Careers in banking are wasting assets; someone will only get so many bites at the apple, and is far less Canada Goose online likely to be at the same firm than they were in canada goose black friday sale Gus Levy time. The industry too, it is important to understand, is also a wasting asset; it is shrinking and may uk canada goose well shrink substantially buy canada goose jacket cheap from here. Ironically, that may well mean it is even more rational for bankers to burn clients.
It notable buy canada goose jacket that Smith scrambled to get back onto his feet after his plan to return capital to shareholders was knocked down canada goose clearance by shareholders.
Pandit wants to return capital to shareholders because they clearly canada goose clearance sale value that capital much more highly in their own hands than they do in his. Each of my dollars is worth $1. Each https://www.canadagooseoutlete.com/ of Citigroup dollars, by contrast, is worth just 58 cents: that the price to book ratio that Citi trading at right now.
As a general rule, when banks are worth much more than their book value, long term greedy makes a fair amount of sense: each dollar you make for the company becomes worth much more than that when looked at through the lens of the present value of the franchise value that dollar represents. When banks are trading at a substantial discount to book value, on the other hand, it makes just as much sense for employees to extract as much money from them as they canada goose can, as quickly as possible. And shareholders too, for that matter. That why Vikram wanted to give them their money back.
This mindset canada goose coats is indicative of a broken system, as Anat Admati explains:
If a strong bank retains its earnings and Canada Goose Online invests prudently, shareholders are still entitled to the profits from these investments, as long as debts are paid. Many canada goose coats on sale successful companies do Canada Goose sale not pay dividends for extended periods Canada Goose Outlet of time, canada goose store and their stock prices reflect their good investments. When banks Canada Goose Jackets distribute profits to shareholders and continue to Canada Goose Parka borrow, they create more risk. This pollutes the interconnected financial system by increasing its fragility. If banks do not want to invest the profits, they can use them to pay canada goose uk black friday down some of their debts.
What this says to me is that the entire banking system, from Citi to Goldman (which itself is trading at just 0.92 times book value), is locked into a vicious cycle of short goose outlet term greed, where everybody from traders to shareholders is trying to get their canada goose uk outlet money out as quickly as possible, and regulators are fighting a rear guard action trying to prevent them from doing so. It fundamentally dysfunctional and adversarial, with bankers pitted against both regulators and their own clients. And yet at least at the biggest banks, like Citi and Goldman, it might ultimately help to shrink them down to less dangerous size.
What regulators should be doing, I think, is encouraging the likes of Citi to give back capital to cheap Canada Goose shareholders just so long as the bank capital ratios go up at the same time. In a word, deleveraging. The lesson of the 2008 bailouts is very much that no matter how much capital uk canada goose outlet you inject into banks, they won lend it out in the real economy. So let allow that capital to leave the banks, return to shareholders, canada goose uk shop and get invested in the economy some other way. Just so long canadian goose jacket as when that happens, the big banks shrink commensurately.