Former Federal Reserve Vice Chairman Alan Blinder believes that multiple problems in the financial system have gone unaddressed, though more than five years have passed since the meltdown.

"Attention spans are short in the public and in the industry," Blinder said at a public lecture at the Museum of American Finance in New York Tuesday evening. His criticisms of the persistence of "perverse compensation systems" and "unduly complex" financial tools echoed points from his 2013 book, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. But if the world is as easily distracted as the Princeton economist claims, certain arguments bear repetition.

Credit rating agencies were one target of Blinder's censure on Tuesday. Under the current system, companies hire and pay the agencies that are expected to provide objective ratings of their securities. This potential conflict of interest may have led agencies to post inflated ratings that failed to reflect the looming housing crisis in the mid-2000s, according to Blinder.

The problem is easy to fix, Blinder said. Agencies should either be assigned to banks at random, so that companies can't pick and choose among them, or else "hired and paid by a third party" like the Securities and Exchange Commission or the New York Stock Exchange.

Blinder also had some harsh words for the pay packages that give "mostly male," "macho" Wall Street traders "go-for-broke incentives."

"Why do people in charge of companies tolerate a system that gives [traders] incentives to take too much risk?" Blinder asked, noting that traders face little consequence if they make the wrong financial bet. He suggested a remedy for the issue in a 2009 Wall Street Journal article, arguing that "boards should … change compensation practices to align the interests of shareholders and employees better" and suggesting that "traders could have their winnings deposited into an account from which subsequent losses would be deducted."

But the U.S. has learned some lessons from the crisis, according to Blinder. He was optimistic that the Federal Deposit Insurance Corp.'s new resolution process for systematically important financial institutions — mandated by the the Dodd-Frank Act — will prevent another Lehman Brothers-style collapse.

The next time a major institution fails, the FDIC's "sensible set of rules ought to enable the government to lay demons to rest peacefully," Blinder said.

That said, Blinder admitted that regulators' "single point of entry" strategy, in which agencies shut down the holding company of a failed bank while allowing its subsidiaries to continue operating under a bridge financial company, might leave those subsidiaries facing "potential contagion by name."

"If you obliterate the holding company but the bank lives, will people discriminate" against subsidiaries that share the same name? Blinder wondered. "People should get the distinction, but in a panic — maybe not."

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