CFO: Beware of Banks with Too Much Debt

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CFO notes in an article based on an interview with Ilya Strebulaev, an associate finance professor at the Stanford Graduate School of Business, that the next inevitable collapse of the financial system would be different from the events following the collapse of Lehman Brothers, it would have some similarities.

According to CFO, Strebulaev says because the system hasn’t been strengthened enough by rule-makers in the wake of the Great Recession, it won’t be able to withstand a cataclysm.

CFO said Strebulaev notes three basic sources of weakness which includes misguided bank corporate governance that has aligned the incentives of managers “such that they prefer to risk or to gamble.”

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Terry Mulreany
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