He is suggesting that top executive and trader pay be based on the long term performance of the fund. In particular, their own money should be invested in everything they do, and likely also for a number of years after they leave.
I'm not saying that misalignment of incentives doesn't play a significant role in a lot of what we are seeing now, but never underestimate hubris.
Funds that too hard to value or are highly leveraged should switch from regulation by the SEC to regulation by state gambling commissions. It would be tricky to find the right cutoff, though, but if an investor would have to travel to a Native American reservation to buy credit default swaps, they might start thinking about whether they really understand what they're investing in.
No restrictions on what funds can do, no government bailouts, but full disclosure so that clients may impose their own restrictions.
EX: Would you bet 1 billion dollars with slightly less than even odds?
Well if you don't have a billion dollars then your real risk could be much lower vs. your potential gain. The real question is who would trust you to actually have a billion dollars? That's the real sucker, unless he also lacks a billion dollars.