The former Chairman of the American Federal Reserve, Alan Greenspan, once believed that lending institutions were doing a good job of protecting their shareholders. Following the credit crunch experience he admitted to being in a ‘state of shocked disbelief’. Perhaps this ‘shocked disbelief’ could now extend to investors and regulators (and indeed accoun- tants themselves) who once beli…
The problems with banker incentives are complex, but few could argue that those who received substantial bonuses at the end of 2006 and 2007 always acted in the interests of their share- holders. In the wider world, senior bankers created a very volatile and fragile financial system that was on the verge of breaking down, saved only by generous handouts from various central banks. An accountant…