Barney Frank Wants A Moratorium on Wall Street Bonuses
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According to reports from Bloomberg, Barney Frank, Chairman of the House Financial Services Committee, said there should be a moratorium on bonuses for Wall Street firms until they come up with a way to stop encouraging excessive risk-taking.
Frank said there is a negative incentive effect because executives get a big bonuses if risky bet pay off, but don't lose anything if there is a loss.
Frank said the moratorium should be for all firms.
Wall Street is known for their massive bonuses, and last year paid out a record $39 billion. Now three of the five major Wall Street investment banks are gone and the other two had to evolve into bank holding companies. Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) are the last two standing after Lehman Brothers (NYSE: LEH) failed and Bear Stearns and Merrill Lynch (NYSE: MER) were sold in fire-sales.
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Moratorium on bonuses
Michael Geringer on Oct 22, 2008 01:03 PMThis is taking socialism way too far.