One more point regarding the bonus question. I don't believe that Wall Street properly accounts for the amount of risk traders take. Should that trader receive 10% of the money he made for the bank that year? No, absolutely not. Because he or she could lose just as much or more the next year. The time horizons are skewed and people on Wall Street are compensated based on short time horizons when the risk in fact is spread over many years. Unfortunately, when things go sour, the general public pays disproportionately.
Yes, exactly. This nails the fundamental problem with the street in my view: unlimited upside, limited downside. You risk everything and have a great year you are rolling in cash. You aim high and fail miserably you probably get fired and maybe even picked up at another bank. This doesn't even get started on the lack of criminal enforcement for fraud, etc. Right on.
Oh, I didn't mean to imply that there is fraud in the vast majority of cases. Just that there is some subset of that behavior that produces fraudulent activity.
