Re:(FinTech) Synapse has collapsed, 10M consumers, 100s of f...
by smarm52 on Sunday May 26, 2024 @07:43PM
(#40486341)
> The problem is that people who are in charge of other people's money will risk it for various reasons, often due to a conflict of interests.
Thank you for your response.
I wanted to amplify this point. This sort of thing is very common in hierarchical organizations. de Mesquita and colleagues have a model that fits reality quite nicely, and indicates a reason for this behaviour.
https://en.wikipedia.org/wiki/The_Logic_of_Political_Surviva...
The problem us that consumers are not capable of figuring out whether a corporation is well managed or not. They have neither the information nor the analytical abilities. Analysts, even specialists in risk, and regulators often get it wrong! Very few people saw the 2008 collapse coming. Some of us had doubts about particular institutions (Northern Rock, first UK bank to go, in my case) or about the level of bad mortgage lending, but very few people, and very few of those who were supposed to know,saw it coming.
> And I'm not sure where this argument comes from that capitalists wouldn't care about their money.
Where did you get that from? The problem is that people who are in charge of other people's money will risk it for various reasons, often due to a conflict of interests.
Edit: to add, the problem is really "agency issues" - was trying to avoid terminology.