Mackenzie, Michael A.
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The need for a much higher level of professionalism on the part of all those involved in the management and supervision of financial institutions. A report on this and related statements made by the speaker in an address made to the Empire Club in 1988. The impact of changes since then and new lessons learned. The importance of effective self-governance. A credibility problem with the public at large. Bad real estate assets as the main current threat. An examination of the lure of real estate for financial institutions and controls exercised by management, boards of directors and owners over real estate-related loans and investments: what went wrong? The increase of risks when there exists an intensity of competition in financial services in a poor economic climate. What this means for corporate governance and what can regulators do about it? Approaches to governance issues discussed under the following headings: Capital, Asset Quality, Management and operations quality, Earning power, Liquidity (CAMEL). Supervising programs and the place of the regulator. A description of some problems encountered. Some concluding remarks about the combination of market failure and poor, or even only moderately competent, corporate governance resulting in the regulator's inability to act to prevent failure. The need for corporate governance procedures that are excellent and credible.