Reviewing Wharton School Article on lessons from the crisis

Knowledge At Warton Business School published this article recently
The Crisis and the CFO


Morgan Stanley's Newly Named CFO Recalls the Unfolding Crisis, and Sees Progress

"Ruth Porat, whose ascent next month to the role of chief financial officer at Morgan Stanley was announced Tuesday, directed the firm's financial-institutions investment-banking business as the financial crisis unfolded in the fall of 2008. At the 10th annual Wharton Finance Conference recently, she said that a key lesson from the meltdown was that liquidity is critical to financial institutions,  and when it leaves the system, it rushes out like air from a balloon." According to The Wall Street Journal, Porat, 52, worked closely with federal officials as they grappled with the panic. A Morgan Stanley team that she helped run advised the Treasury Department last summer on battered mortgage giants Fannie Mae and Freddie Mac."
-What? A lesson that liquidity is critical to financial institutions? The financial institutions still do not have adequate liquidity to manage their loses. The liquidity needed to keep the banks from imploding could not have been provided by anyone unless the rules of accounting for changed or ignored. The capital from the government was not nearly enough to help the extremely over leveraged banks. This is just another statement that shows you corporate execs will say anything to delude the reality.-

More from the Article

"Porat pointed to three factors that are critical to the ongoing process of recovery:
1.  keeping the economy going;
2.  enacting global regulatory reform without putting a drag on the economy;
3.  unwinding the government intervention that was critical to stabilizing the economy in the initial stages of the crisis."
Those points seem fairly obvious but the solution to these meltdown is to start putting pressure on the banks to restructure the date of millions of underwater homeowners.  The moral hazard argument went out the window with the trillion dollar bank bailout.  For some reason the government has decided to make it as difficult on the home owner as possible while bending over backward to rescue the financial sector. 


The travesty is the outflow of money from the average American citizen. 

Additional Titles written by Chris at Ezines Expert Authors