Wednesday, July 30, 2014

Traders had incentives to take huge risks in Wallstreet

For what concerns bankers and traders, one of the biggest problems in the crisis was the way they were compensated. 

There were huge incentives for them to take on a lot of risk and leverage. If the risky investments turn out right, they get large profits and bonuses, and if they turn out to be wrong further down the line, they've already pocketed their bonuses. 

The worst thing that happens is you don't get another bonus.