Filed under: Employees, Economic data, Federal Reserve, Recession

The New York Times agrees with a proposal I’ve been posting about for months, for example, here and here. The Times suggests that “banks should hold a big chunk of bankers’ pay in escrow to be paid out over a long period. Compensation could then be made contingent on the long-term success of each banker’s strategies.” The only way this could actually happen is if all banks agreed to it. And that won’t happen unless the government mandates the idea.

This is a timely discussion because The Washington Post reports today that bankers are expected to earn bonuses of $33.2 billion for 2007 — just 2% below 2006’s record year — that despite about $100 billion worth of write-downs due to bad loans and a loss of $200 billion in market value for the seven biggest banks.

Not everyone did well. Bonuses were down by as much as 50% to 60% in subprime-mortgage-related departments, while groups such as investment banking took in bonuses that were on average 10% higher than in 2006.

Continue reading Bankers should be rewarded for their success and pay for their mistakes

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This entry was posted on Wednesday, January 30th, 2008 at 1:37 am and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.