Barney Frank Wants A Moratorium on Wall Street Bonuses
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.
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.
You May Also Be Interested In
- 10 analysts discuss Meta Platforms (META) stock after earnings selloff
- Amazon to invest $11 billion in Indiana to build data centers
- Microsoft's AI lead puts Amazon cloud dominance on watch
Create E-mail Alert Related Categories
General NewsRelated Entities
Goldman Sachs, Morgan Stanley, Bear Stearns, Lehman BrothersSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!