Thursday, January 14, 2010

Some questions for the Crisis Commission to ask Wall Street CEOs

1. How much were your total writedowns on securities and how much by type of security?

2. Why was your bank holding such a large amount of unsold securities?

3. Were your huge RMBS and CDO exposures flagged by your risk management system and your risk management professionals?

4. If so, why didn't you seek to hedge or reduce these exposures?

5. If not, please explain your understanding of the words "robust risk management".

6. Is it the policy of your firm to "originate to sell" or to "originate to hold"?

7. What did your firm's internal capital models indicate with respect to capital adequacy at the end of 2007?

8. How did your capital models perform in 2008?

9. What did your firm's internal liquidity models indicate at the end of 2007?

10. How did those models perform in 2008?

11. How don you explain the utter failure of your firm's risk management, capital adequacy and liquidity models and policies in 2008?

12. How would you define "competent management" in the context of your industry?

13. In view of your industry's near collapse and rescue by the government, do you support strict regulation of risk management, capital adequacy and liquidity?

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