May 28, 2011
I’m writing because my family and I were affected by the economic collapse of 2008, and we don’t want it to happen again.
In the recent downturn average citizens and governments absorbed the impact of bad investment choices while those whose decisions caused the problem collected fat bonuses. Layoffs, foreclosures, deficits and budget issues at all levels of government have spiked since 2008. Incentives for financial executives need to be structured so that the executives are personally exposed to the risks associated with their business decisions as well as the rewards, and the exposure needs to be long term.
Wall Street greed and outrageous pay practices were a major cause of the collapse. One way to change the incentives so they don’t collapse our economy again would be to delay the bonuses for three, five or more years. That way, we’ll know if the loans they made in year one remain good. In the bad days, bankers paid themselves on the volume of loans (mortgages) they generated, not on their quality.
Thank you for considering my comment,
Michael Miller
Raleigh, NC