Access Minnesota

27 January 2016

Reforming Wall Street

For the week of January 31, 2016

Richard Painter is the S. Walter Richey Professor of Corporate Law at University of Minnesota and co-author of “Better Bankers, Better Banks: Promoting Good Business Through Contractual Commitment.” This week, he discusses how a change in financial incentives for bankers could help reform Wall Street.

  • Part 1

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    (1:16) Large bank settlements, like the recent Goldman Sacks settlement, are paid by the bank shareholders, not those responsible for the risky behavior; (2:18) The portrayal of Wall Street by movies like “The Big Short;” (3:10) Factors that led to risky behavior by the banks; (4:44) Responsibility of boards of directors; (6:20) Painter’s proposal to tie compensation and bonuses into the success or failure of the bank; (9:12) Why risky behavior on Wall Street often goes unpunished; (10:06) Risky behavior has declined since 2008 but the compensation system still encourages risk; (10:50) Dodd-Frank Act and bank regulations

  • Part 2

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    (:23) Painter believes if bankers had had their own assets on the line prior to 2008, the financial crisis would have been less severe; (1:35) The book suggests banks enact these actions on their own, without congress; (2:46) Incentives for banks to reform; (3:44) If financial incentives are changed for bank executives, there would be less pressure on the SEC; (4:52) The repeal of the Glass-Steagall Act and deregulation of banks in the late-1990s; (7:50) The biggest challenges standing in the way of Wall Street reform; (9:28) The vulnerability of our economy today; (10:25) The global economy makes reform and regulations more difficult

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