Bonuses for Investment Bankers : Regulate It, Tightly!

A wonderful article, published in the NY Times, by the Prof of NYU and Author of  the book 'The Black Swan', espousing the negative impact of bonuses to investment bankers. It is the one percent of investment bankers out of the entire world of banking who failed the capitalist model across North America and Europe instead of bankers involved in the 'good aspects' of banking within corporate banking and trade finance or in credit cards and branch banking or in various support functions. The title of the article in NY Times should not have been just bankers but should have been titled 'End Bonuses for Investment Bankers'.

Although, I agree with the thrust of the article, however, bonuses and regulations should be regulated for the CEO's and investment bankers and some parts of the mutual fund and hedge fund areas of the banking system and not for the rest of the 'boring' banking community who work hard around the world from small villages to large cities while supporting millions of small to medium size businesses and facilitate trade from China to Colombia besides providing home and car finance or deposit taking and basic money transfer facilities which we take for granted today. These investment bankers create derivatives and structured products which have destroyed wealth instead of creating wealth and caused lack of trust in all bankers by the general public.

Once this trust is restored based on the essence of this article and changing of laws governing derivatives and investment banking with a major regulation of bonuses in the investment banking and derivative areas of 'banking', only then a meaningful change can be effected while restoring trust in bankers again by the general public.

Please do read this article which must find its way to the mind and hearts of our regulators and lawmakers who can drive the change and make banking a social cause (which it has been for centuries) and not just a profitable cause or an avenue for higher tax revenues, at the cost of the masses. 

The investors and public would be better off, if they do not support or invest in derivatives and structured products (hence reducing demand for mostly useless products) and suggest to their lawmakers or discuss with fellow businessmen to engage their banking community contacts to drive this change.

End Bonuses for Bankers

BY NASSIM NICHOLAS TALEB

Published, November 7, 2011