[pdonis]

> make the shareholders take it in the wallet for their reckless business practices

The problem is that those business practices weren't decided by the shareholders. The shareholders in most cases are mutual funds holding millions of people's retirement savings. Those people had no say in the business decisions made by the companies; they don't even control which individual stocks the mutual funds invest in. Their retirement savings are not what should be taking the hit.

[jddj]

So where is the accountability, then? Does it fall on whatever % of owners who are active investors? Or are they shielded by the fact that there's a mutual fund present who pledges to simply vote with the board on every decision?

Doesn't saying that these are people's retirement savings and so structurally should only ever be allowed to go up in value create perverse incentives and remove all of the responsibility from.. everyone involved?

Shareholders benefited massively and accumulated huge rewards from the market leveraging up during the borrow-for-buybacks period, and now in a downturn we're throwing our hands up and saying that we can't let those companies face any negative consequences for taking on that risk because nobody was in control? Or some people were in control, but there were also some who weren't?

Something is missing here if a company having passive shareholders means it should do well, business-practices-be-damned.

[pdonis]

> So where is the accountability, then?

There isn't any real accountability as far as shareholders being able to hold corporate executives and boards of directors accountable. That is a huge breakage in corporate governance that won't be easily fixed.

> saying that these are people's retirement savings and so structurally should only ever be allowed to go up in value

Who said that?

All I said is that, since the shareholders weren't the ones that made the questionable business decisions, they shouldn't be the ones that are shafted because everyone wants a scapegoat.

> perverse incentives

There are certainly perverse incentives for corporate executives and boards of directors, but they aren't of the form you describe. It's simpler than that: it's just what I said above, that there is no practical way for shareholders to hold them accountable.

> Shareholders benefited massively and accumulated huge rewards from the market leveraging up during the borrow-for-buybacks period

And now they are taking the hit from the market tanking. My 401k is down quite a bit.

> now in a downturn we're throwing our hands up and saying that we can't let those companies face any negative consequences for taking on that risk because nobody was in control?

I'm not saying that. I'm just saying that (a) the shareholders weren't the ones that made the bad decisions, and (b) the shareholders are already taking a hit anyway.

If you really want the government to Do Something, it should fix the perverse incentives that corporate executives and boards of directors face. Having real criminal penalties for breaches of fiduciary responsibility, and stricter rules for what companies that take any investment from retirement funds can do, would be a good start.