This is your daily pension announcement: Here is a slightly more technical hot take on what happened at AIMCO to lose $2 billion. Apparently, not learning from the mistakes of the sub-prime mortgage crisis is bad! #ABLeg
bnnbloomberg.ca/risk-model-fro…
"Value-at-risk calculations like the ones AIMCo used were partly blamed for underestimating the risks of the subprime mortgage derivatives that fueled the 2008 financial crisis, leading banks to incur far larger losses than they had expected were possible." #ABLeg #AIMCOfail
Remember the (super thin) review of the VOLTS strategy is on the AIMCO website. I am left with some questions. In particular, the review included:
• the role staffing resource constraints may have played
• the role the design of our compensation framework might have played in the incentive structure for management
But, none of the conclusion addresses these issues(?).
Incentive design is important because of bonuses.
If bonuses are structured inappropriately they will incentivize the wrong behavior. #ABLeg
Not addressing this factor in the recommendations is a bit perplexing. #ABLeg
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