Tuesday, September 30, 2008

Quote of the Day: Wall Street bankers tend to do things like buy their houses for cash

Megan McArdle has a great post up with boatload of zingers. Here's the best one:

To those who are averse to bailing out Wall Street rather than Main Street, it's worth noting that Main Street will suffer worse than Wall Street. Because of the way that their compensation is structured, Wall Street bankers tend to do things like buy their houses for cash.

2 comments:

Icheb said...

Sow is their compensation structured to make that a sensible approach? Posting some interesting fact without clarifying it is stupid, on your and on the original author's side.

Chris said...

icheb,

My apologies if the quote was too cryptic. The point is that bankers get most of their compensation in the form of year-end cash bonuses. During the recent boom, bankers have been cashing in every Christmas with multi-million-dollar bonuses.

This means that, ironically enough, the very people who are responsible for securitizing mortgages don't bother taking them out themselves, and thus won't feel the pain of an economic collapse as much as us, the general public.