The overwhelming power of banks and finance is not good for the system and the time has come to implement the long-awaited and commented reforms. He writes it Serena Torielli on the blog of Adviseonly, the new online financial advisory site of which Torielli herself is CEO and which she founded with about ten partners among which the most outstanding Claudius Costamagna, a former Goldman Sachs golden boy.
In the early 90s, the closest financial crisis he remembered was that of '29. From the collapse of the Asian Tigers in 1998 to the subprime crisis of 2007, on the other hand, at least 4 financial crises have followed one another very closely. Why has no regulator decided to take adequate action? And above all why, if the banks are one of the main causes of these collapses, was it decided to save them?
The answer is as simple as it is bitter to admit, especially for the outraged: the banks are "the lifeblood of our system" and a bankruptcy of a major credit institution would lead to chain collapses in the real economy. It is the idea of "too big too fail” and, until the system is changed, you have to accept it.
Serena Torielli has worked for years at Goldman Sachs but feels sympathetic - in part - to the demands of the outraged, especially those in the American version of Occupy Wall Street. Having known the system from the inside she explains how and where the diseases of the system reside.
The ex-broker believes it goes first rethought and regularized the employee remuneration system. Traders are incentivized to make high profits because they know they will make a high percentage of it. The problem is above all that there are no adequate controls on the "quality and appropriateness" of certain transactions. Also too often, in the risk that the individual broker assumes, the gain and loss are not symmetrical: if you invest well, you get a high return, if you lose the bank's capital, the maximum risk you run is to lose your job.
Furthermore, the problem of trader and bankers is that are "paid too much compared to workers in other sectors e they are not controlled enough“. In short, we need to find the "appropriate incentives limited by correct control structures". The time has come for the regulators to intervene and in this he agrees with the outraged.
