The answer is that bank risk-taking was not necessarily excessive from the perspective of the bank stakeholders, since banks were living in a world with private gains but public losses.
And it shifts exposure off the balance sheet, so that shareholders are left less aware how much risk their bank is taking.
But the bank is also taking the risk that rulings in either case could damage its chances in the many lawsuits it faces from other insurance companies and investors.
"There is a risk that a bank is taking results from a model and relying on those model results too extensively, " said Jeffrey Brown, a managing director at Promontory Group and former risk manager at the OCC.
Mr Newman tried to clean up the bank, to curb its risk-taking culture and to wean it off derivatives.
If the possibility of large bonuses indeed generates excessive risk-taking, then bank stakeholders have ample incentive to adopt such limits without government coercion.
Sir James Crosby quit as deputy head of the Financial Services Authority (FSA) amid embarrassing questions about risk-taking at the bank he used to run.
Many thought that he had ruined the risk-taking culture at the bank without substituting much else.
Given that Google had only ten million dollars in the bank, the company was taking a huge risk.
In principle, such an approach would appear well justified, as our financial system has become less bank-centered and because activities or risk-taking not permitted to regulated institutions have a way of migrating to other financial firms or markets.
Some see this as a victory within the bank of Germanic conservatism over Anglo-Saxon risk-taking: Vereinsbank has always been happier with low risks and low returns than wheeler-dealing Hypo-Bank.
Probably the single biggest error at HBOS, exposed by standards commission, was that those who tried to control risk-taking at the centre of the bank did not have the mandate or power to rein in over-exuberant divisional bosses.
In fact, over the past three years Deutsche Bank has deliberately and dramatically reduced its dependence on risk-taking as a source of operating earnings, while enjoying more substantial progress with clients than at any time in its recent history.
Third, Adoboli is painting a very real story of what trading, risk taking, is all about at a big bank.
He pointed out that the boss of Lehman Brothers had held an extremely large holding of the investment bank's shares - but had still allowed the risk-taking that led to its collapse.
He had also conveyed the FSA's worries about the bank's culture, including the attitudes of its most senior staff to risk taking, and flouting the spirit of tax laws and banking regulations.
Smith also scoffed at the notion that some working developers were taking a risk by jumping from the cushy salary of a bank or consultancy to work for a startup, which could fail.
He also conveyed the FSA's worries about the bank's culture, including the attitudes of its most senior staff to risk-taking, tax laws and banking regulations.
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In theory, even a slight risk of redenomination ought to justify taking every last euro out of the bank, whether stashing it under the mattress or abroad.
The uncertainty of a stock sale in this environment, where the markets are volatile and investors are skittish about taking on risk, is one reason why expectations were high of a bank-led buyout.
The good news for the Mets, Panthers and all the other teams with bank names on the door: It's your partners' images that are at risk of taking a hit, not yours.
Proprietary trading is harder to defend when it is sheltered by a government guarantee but any bank that acts as a marketmaker between buyers and sellers will end up taking some form of proprietary risk.
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They care about the size of bailout necessitated by excessive risk-taking taken by banks, and about economic growth, but not about how bank profits are divided per se, since they don't get a cut in any case.
The bank was told to examine how it pays top executives, and how they are rewarded for taking on risk.
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By offering insurance on mortgages, the FHA is taking some of the financial risk off of the shoulder of a mortgage lender like Deutsche Bank which might not want to offer loan to just anyone.
The Federal Open Market Committee will end a two-day policy-setting meeting later Wednesday that is likely to show central bank officials are more upbeat about the economy but not enough to tighten loose-borrowing costs that have encouraged risk-taking, economists say.
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