Not all of them abused the system, but Wall Street bankers and traders could earn Croesus-like compensation packages in the past years by piling full-throttle into whatever was hot -- subprime, CDOs, commodities, whatever -- and collect an enormous bonus before the shoddiness of their creations became apparent. You know it's coming … "That's the way we do it. Get your money for nothing and your chicks for free."
Take former Merrill Lynch
Credit Suisse Group
While the idea might not stick, it seems devilishly smart in terms of aligning bankers' and traders' interest with the products they peddle. With banks like Goldman Sachs
I really hope this style of compensation starts to take hold. One of the biggest reasons we're in this mess is the result of a ludicrous compensation system that praised anyone with the gall to take stupendous amounts of risk without any consideration to the consequences of that risk. After a while, it became what was probably the most extreme case of moral hazard in history. Fix the compensation problem alone, and you'd do more to overhaul a broken financial system than any number of bailouts could do.
For related Foolishness:
More from The Motley Fool
Why Deutsche Bank AG Jumped Today
A proactive step to repurchase discounted debt satisfied investors on Friday.
Why ConocoPhillips, Primero Mining, and Credit Suisse Slumped Today
Even with the market picking up a little ground, these stocks fell. Find out why.
Why Credit Suisse Group AG Stock Dropped Today
The Swiss bank posted its first annual loss since the 2008 financial crisis.