Summary
People all know this story. It begins with historically low interest rates, unreasonably low risk premiums and a flood of global cash looking for returns. It moves on to excessive leverage, a search for yield through opaque and risky products for nontraditional markets. While this story is not over yet, the lessons that can be learned so far are: 1. Managers do what they're paid for. 2. Strong incentives are not enough; risky behavior also must be restrained. 3. If you're associated with a product, you haven't transferred the risk. 4. Be careful what you wish for. 5. Self-regulation is an oxymoron and a thing of the past.
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Lessons Learned
We all know this story. It begins with historically low interest rates, unreasonably low risk premiums and a flood of global cash looking for returns. It moves on to excessiv...
See the full content of this document
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