“I have no problem with pay that encourages efficiency. What I do have a problem with is pay that incentivises the development of a complex security designed to fail. That security being sold to a public pension fund. The originator earning a fee for structuring and selling this security. The originator, knowing the security is flawed, betting it will decline in value. The originator making multiples of profits on this scheme and not being prosecuted.
I think it is very important that the banksters know that we the people know what they did. Just because they bought their way out of prosecution, doesn't mean they will escape a much more dire faith if this country collapses due to their actions.”
Kai-HK on Jan 23, 2011 at 21:58:14
Thanks for your email. I agree with you on efficiency. But disagree with you on complex securities. People need to get away from unsupported talking point that claims that these were designed to fail. In fact they were not, they were designed to expose sophisticated investors to the requisite amount of risk they desired, for a price. These highly-educated and experienced investors knew what they were buying, they just priced it wrong and got on the wrong side a bad financial bet. This happens from time-to-time. One thing I hated about the tech boom-bust and this housing boom-bust, is that people took out bets during a bubble and got caught naked when the bubble bust. Then they start blaming the people that sold them the securities. This is lame. If you invest, you have the chance to lose; otherwise do not invest. They wanted the risk, they got it, they lost, and now they want top blame the institutions that sold them the risk they required. Again, lame.
They didn’t buy their way out prosecution, They just got tired of the bad press since the prosecutor was more interested in trying the cases in the media than in the courts. It is nothing but government-driven extortion. That is why there are no convictions. The proof does not support the claims and would never stick in court. That simple.