At the Bloomberg Markets 50 Summit in New York, Krawcheck said that banks are currently trading below liquidation value because investors are struggling to determine what returns to expect and added that complexity of the firms and their regulation obscure their value.
"Regulators are fighting complexity with complexity, rule by rule. It is so complicated, it makes you weep blood out of your eyes," Bloomberg quoted her as saying.
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"How do you handle the complexity, break them up? All of the things we’re debating are merely a means to an end, which is finding a way to cut risk," she further added.
Moreover according to her, giving employees a combination of bonds and equity will moderate risks since midlevel managers with a firmer grasp of risks are not unduly encouraged to take bad ones.
Top executives, directors and regulators have a hard time evaluating risks from their level, she opined.
Krawcheck explained that bonds are a risk-averse instrument because irrespective of the risks, it would give 100% returns if held on till maturity, unlike a share of equity, where one would prefer to take risk and hope for the stock to rise.
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By GlobalDataCompensation should lean more toward bonds as leverage rises, she told at the summit.
