Incentives to Leverage Us into Recession
Published under Economics, New York City, United States Apr 28, 2008Ben Stein’s article in the New York Times Wall Street, Run Amok highlights one of the core reasons why our financial system is not working: investment bankers are incentivized to leverage themselves to the sky; the more debt they take, the more their upside from structured deals and the more compensation they get, with the downside severely mollified by the public serving as the unwitting insurer.