Everyone agrees that playoffs would be the ideal way to determine the championship. But football is different from basketball (where we already have playoffs) in that it is so much harder on these kids and would take so much more time, when it is already limiting study time. Many are very poor and have to try to work jobs.

Mr Hatch: Life isn’t always fair even in its most important aspects.

(I won’t go go into whether 0 losses automatically means anything.)
Mr Obama: You’re calling for playoffs to make sure we have a deserving winner?

In haste. Yes, y’all told me so in 2008, and y’all were right. The Kennedys were not redwoods, nor were the GOP. So Obama got into the WH on a tide of stupid votes.

But are strong competent people in other nations going to let his POLICIES sweep beyond his popularity?

Astute commentary from you.

I’ll lift yours and some of the story for Boojum Post perhaps with either more or less coffee. Right now, Jiang Jianqing is someone marching on the Nome King.

MacKensie the premier management consultant firm in the world offers this up as a source of enouragement to the world. Hoevever they fail to mention that China has had explosive growth in GDP thanks to its MFN status in 2000, unfettered access to US markets, outsourcing of our manufacturing sector to them, no wars to fight and a number of factors which are not just unique but sui generis. Nevertheless, his commentary is interesting.
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The Quarterly: How do you control risk in a big institution like ICBC and how do you build that into the culture of the organization?

Jiang Jianqing: We’ve learned our lessons on risk. In June 1999, the nonperforming loan ratio at ICBC reached 47.5 percent. At the time, some Western media claimed Chinese banks were technically bankrupt. You can’t imagine the pressure we bankers faced then.

The first step in addressing the problem was to focus on risk management. After I was appointed president3 in 2000, one of the first things I decided was that we must hold the nonperforming ratio for new loans to less than 2 percent of assets. We created a credit-management system to control existing and new loans. By addressing irregularities and punishing violators, the quality of new loans quickly improved. Since then, ICBC has kept its nonperforming ratio for new loans to 1.7 percent.

Changes in the regulatory environment helped as well. In the wake of the Asian financial crisis, the Chinese government reorganized and developed the nation’s financial regulatory system, putting great emphasis on risk management, creating the China Banking Regulatory Commission, enacting a range of new rules and regulations, and introducing stricter external auditing and accounting standards. China’s large commercial banks developed sound governance structures and were subjected to close scrutiny from investors as they prepared to list shares publicly. This combination of internal and external factors substantially improved the governance of China’s financial institutions and left them in much better shape to manage risk today. Now ICBC’s bad loan ratio has been reduced to 2.2 percent.

In the end, though, the key to risk control is employing good people. That’s why we put so much emphasis on ethics and developing a corporate culture that values precision, professionalism, and teamwork. Good governance is impossible without a good corporate culture.

The Quarterly: In response to the global financial crisis, the Chinese government has recently announced a series of measures to spur domestic demand. How do you balance concerns about maintaining credit quality with the bank’s social responsibilities and government directives to support growth?

Jiang Jianqing: The government’s recent decision to boost domestic demand offers a great opportunity for the banking industry. However, ICBC is a commercial bank and we have to view these opportunities from the business perspective. I believe we have the ability to seize the opportunity and spur economic growth while also controlling risks. The fact that China’s finance industry has not been badly hit by the ongoing crisis should be attributed to great efforts and timely reform initiated by the Chinese government after the Asian financial crisis. The high-risk situation that China’s banking institutions experienced before is the last thing we want to see this time.

The Quarterly: Has the financial crisis altered your thinking about the merits of introducing more complicated forms of financial products, such as credit default swaps or other derivatives?

Jiang Jianqing: Derivatives weren’t the straw that broke the camel’s back. The current crisis is the result of a combination of problems. We shouldn’t reject the need for innovation in financial services merely because it carries some element of risk with it. In China, we say: you can’t stop eating just because you’re afraid of choking on your food.

China’s challenges differ from those faced by financial institutions in more developed economies. We haven’t suffered severe losses in the current crisis, because we didn’t invest in the complicated products that triggered it. But if you think carefully, this could be exactly where challenges emerge in the days to come. As interest rates are increasingly determined by the market and financial disintermediation that develops in China, the traditional loan-led banking model is bound to change. We’ll have to have more complicated financial products. Yes, we need to minimize risk, but we can’t dispense with innovation. The question is how to strike the proper balance. China’s banking industry will suffer setbacks. The best we can hope is to limit the pain of adjustment.