There’s a platitude repeated by most CEOs that their main job is not anything so mundane as making decisions, but “mentoring and supporting people” or something like that. Most of the CEOs who repeat this are mediocre at best at mentoring or supporting people, since the key people for any CEO are not the people who work for him or her, but the members of the board of directors. But the truism that is still true is that when you are head of a large organization, you can’t do everything yourself, and your real impact is made through the people you hire, promote, and don’t fire.
In October, Ben Bernanke named Patrick Parkinson director of the Division of Bank Supervision and Regulation. Who is Patrick Parkinson?
EB at Zero Hedge has the history in ten years of extended quotations. Here’s one example from 2005:
“[Transactions between institutions and other eligible counterparties in over-the-counter financial derivatives and foreign currency] are not readily susceptible to manipulation and eligible counterparties can and should be expected to protect themselves against fraud and counterparty credit losses.”
Here’s another from July:
“One of the main reasons the credit derivatives market and other OTC markets have grown so rapidly is that market participants have seen substantial benefit to customizing contract terms to meet their individual risk-management needs. They must continue to be allowed to bilaterally negotiate customized contracts where they see benefits to doing so.”
Now, it’s plausible that the benefits to parties of certain types of transactions may outweigh the costs of those transactions to society at large. But to say that parties must be allowed to negotiate customized contrasts simply because they want to is frivolous. (Insert analogy to illegal drug sales here.)
So Parkinson was another mini-Greenspan–what’s wrong with that? Nothing, really–except that Bernanke promoted him, now when we need someone new to take bank supervision seriously.
Where’s the change?
By James Kwak