Book Cover

Capitalism,  The Way to a World of Peace and Plenty


Skin in the Game

Judging the quality of loans is a traditional responsibility of banks.  This function was abandoned when securitization (packaging)  of mortgage loans created a new product that banks could sell like soap flakes.  Banks took their fee and passed the package along to the next fee charger with no residual responsibility, corporate or financial. This is an example of a “perverse incentive” that motivates bankers contrary to the mission of quality loans.

A solution is to require the originating bank to keep 20%. If the loan goes bad the banks get a hit on their profits because they have:

Skin in the game.

Ray CareyRay Carey

Ray Carey learned through managing companies for 33 years how to change the work culture to provide employees with their best opportunities to develop and contribute. This experience began as a 28 year old plant manager and later president of an electric motor company, and concluded with eighteen years as president , chairman, and CEO of ADT, Inc.

See Carey's autobiography of his work career in chapter two of his first book,

Democratic Capitalism, The Way to a World of Peace and Plenty.

For more information about Ray Carey and his advocacy of democratic capitalism, visit the pages of this website.