Treasury, Citibank, Valenti discussed on Bloomberg Best


The treasury he made one hundred twenty million dollars in compensation from citibank over ten years selling out of the money option thing that explode rarely okay tell risk and one heads he wins and one when the thing happened citibank was insolvent goes to ninety seven cents a share actually and then no black swan you know and as someone else's bear the cost the shareholder and the taxpayers stopping them out on a street so he was not alone of course of course you use him as an example because he's emblematic of that problem exactly generation of people who think that society owes a profits but they don't want to bear the risk lie is it that wall street still has what you claim and argue persuasively is a misconception or amiss attribution if you will about the notion of skin in the game because they don't understand the through three things number one the screen again not just an centers to that insent disincentive are therefore reason since the beginning of times for four thousand years beginning of civilization we have had rules that don't allow the architect to build a structure and then walk away if it collapses and kills people so you have and hamurabi harambee okay third one exactly and the third one is skin in the game is a filter it's evolutionary mechanism if you don't have very dangerous drivers on the roads is because the owns their own risk they die in an accident valenti said if you have a vet driver not likely to die an accident and not lied to me so let's get practical messina how do we make the financial system more darwinian if you will it is working on this by itself and let me explain hedge funds most of the risks has migrated to hedge funds or structures like hedge funds the hedge fund typically investors require the owner or the owners have more them or or somebody quivalent fifty percent of their net worse than the fault is not just not trust a you know none reinvested we vessels office it's their networks why to prevent them from playing the bubble trade it's a 'cause if the fund loses money they suffer as well they suffer as well as clawback without sufficient you need.

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