Incentives: To Swing For the Fences

http://zerohedge.blogspot.com/2009/05/deutsche-banks-socialization-of-risk.html

Great article. Goes along with the my post from a few days ago about incentives, compensation, and the Wall St. system. I found this particularly poignant;

“In general, my colleagues are hard-working, decent people, but the system of incentives encourages people to take risks. I have seen honest, high-integrity people lose themselves in this cowboy culture, because more risk-taking generally means better pay. Bizarrely, this risk comes with virtually no liability, and this system of O.P.M. (Other People’s Money) insures that the firm absorbs any losses from bad trades.”

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