Personnel Responsibility

Where were they?

Everyone wants to know where the risk managers were. Where were the regulators? Where were the rating agencies? Where were the internal controls when all this sub-prime debt was inflating a real-estate bubble?

One of the answers is that they were right there, but nobody was listening–in part because of a culture where successful traders and loan originators get paid seven to fifteen times what a risk manager gets paid. And for the most part it seemed like they were worth it: the sales people put bread on the table. The risk managers just made the auditors happy. One was a revenue center; one was a cost center. You can guess who got the free Red Sox tickets.

Think of it as the jocks versus the geeks. No one listens to the geeks when they tell the jocks not to play chicken with the Principal’s car. Until there’s a crack-up.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T14:07:52+00:00 October 21st, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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