Rolling Stone Magazine’s Douglas Brinkley caught up with President Obama on the campaign trail. The interview isn’t online yet, but we checked it out on paper (old-school) and picked out what Wall Street needs to know.Obama touched on Dodd-Frank (still a work in progress) and reinstating Glass-Steagall (not enough evidence to do it since Lehman wasn’t a commercial bank), but the most important thing is that Obama gets to the one thing he wishes he could change about the Street.
Here it is (from Rolling Stone):
“I will tell you, the single biggest thing that I would like to see is changing incentives on Wall Street and how people get compensated. That ultimately requires not just congressional legislation but a change in corporate governance. You still have a situation where people making bets can get a huge upside , and their downsides are limited. So it tilts the whole system in favour or very risky behaviour…”
He goes on to say that when investment banks were partnerships and the higher-ups had serious skin in the game things were different.
“These days, you’ve got guys who are making five years of risky bets, but its making them $100 million every year. By the time the chicken comes home to roost, they’re already ahead of the game.”
Look, the Street has heard this before — from former FDIC chair Sheila Bair, from former Merrill Lynch executive Sallie Krawcheck, the list goes on and on.
So get in line, Obama.
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