{"id":7322,"date":"2010-10-08T16:58:01","date_gmt":"2010-10-08T20:58:01","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=7322"},"modified":"2010-10-08T16:58:01","modified_gmt":"2010-10-08T20:58:01","slug":"restoring-the-partnership-model-to-wall-street-risk-taking","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/7322\/restoring-the-partnership-model-to-wall-street-risk-taking\/","title":{"rendered":"Restoring the Partnership Model to Wall Street Risk Taking"},"content":{"rendered":"<p>For all the ink spilled trying to divine the cause of the present financial crisis the most stirring theory is that culture \u2013 not capitalism \u2013 failed America.\u00a0 It\u2019s a theory that lies at the heart of the <em>Citizens United<\/em> documentary \u201c<a href=\"http:\/\/www.generationzeromovie.com\/about.html\" target=\"_blank\">Generation Zero<\/a>\u201d and is discussed in eye-popping detail by William Cohan in <a href=\"http:\/\/opinionator.blogs.nytimes.com\/2010\/10\/07\/make-wall-street-risk-it-all\/?ref=opinion\" target=\"_blank\">today\u2019s<em> New York Times<\/em><\/a>.<\/p>\n<p>Asserting the commonsensical notion that people do what they are rewarded to do, Cohan (a former denizen of Wall Street) claims that when firms morphed from partnerships to corporations they simultaneously shifted the risk of loss from executives to stockholders.\u00a0 That simple change in legal form privatized profits while socializing losses.<\/p>\n<p>Here\u2019s Cohan\u2019s solution:<\/p>\n<blockquote><p>To my mind, its central feature should be that each of the top 100 executives at Wall Street\u2019s remaining \u201csystemically important\u201d firms be personally liable for the risks they take. Not just their unexercised stock options or restricted stock, but every asset they have in their possession: from their cars to their fancy homes to their bulging bank accounts.<\/p>\n<p>\u2026<\/p>\n<p>Pretty harsh, right? Maybe, but Wall Street deserves no sympathy. Had this security, or something like it, been in place at every Wall Street firm five years ago, there would have been no mortgage bubble, no financial crisis, no deep and unsettling economic recession with nearly 10 percent unemployment, no need for the Troubled Asset Relief Program, and no need for Dodd-Frank or Basel III.<\/p>\n<p>Why? Because human beings do what they are rewarded to do \u2014 especially on Wall Street \u2014 and if they are rewarded for taking prudent and sensible risks, that\u2019s exactly what they will do.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>For all the ink spilled trying to divine the cause of the present financial crisis the most stirring theory is that culture \u2013 not capitalism \u2013 failed America.\u00a0 It\u2019s a theory that lies at the heart of the Citizens United documentary \u201cGeneration Zero\u201d and is discussed in eye-popping detail by William Cohan in today\u2019s New [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[100,1926,1925,1927,459,1924],"class_list":["post-7322","post","type-post","status-publish","format-standard","hentry","category-posts","tag-citizens-united","tag-financial-regulation","tag-generation-zero","tag-prudence","tag-wall-street","tag-william-cohan"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/7322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=7322"}],"version-history":[{"count":4,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/7322\/revisions"}],"predecessor-version":[{"id":7326,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/7322\/revisions\/7326"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=7322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=7322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=7322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}