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Quote of the Day


Damn, now this is a quote:

“The banks that have taken the taxpayer’s money ought to be part of the solution, but they are acting like war profiteers,” Mr. Rowe said. “If I were in charge, I would haul them all down to Gitmo, put them in a room and say, ‘You have used the taxpayer’s money to pervert our objectives. It is morally wrong and we are not going to stand for it.’”

The rest of the article is well worth reading too.


Sean Paul Kelley November 23, 2008 - 2:03am
Sean Paul Kelley's diary | printer friendly version | digg
( categories: Economics: USA | The Markets )

Moral hazard

It's amazing how little discussion has appeared in the mass media about the moral hazard inherent in unbalanced CxO compensation packages that allow management that pay out the upside without exposing managers to downside risks. The subprime debacle would have been anywhere near as bad if managers were personally liable for some fraction of their firms' losses.

Most people would gamble recklessly if they got to keep 50% of their winnings unconditionally while some other sucker ('investor') covered all their losses.

Wandering Cynic November 23, 2008 - 7:22pm
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