Rather than setting pay levels, the government should require banks and other critical financial institutions to withhold a share of each senior manager’s total pay for several years, a group of leading economists is urging in a new book. The money would be forfeited if the company went bankrupt or had to be bailed out.
...
Another recommendation that has received limited attention in Washington involves a kind of debt instrument known as contingent convertible bonds, or CoCo bonds. Banks would be encouraged to issue such debt, which would automatically convert into equity in a crisis. Such bonds would speed up the recapitalization of an ailing bank, at no cost to taxpayers, leaving bondholders to bear the cost of failure.
...
Squam Lake Report (transcript)
No comments:
Post a Comment