The Subprime Mortgage Scandal - What Really Happened (2)

What's most interesting is the parallel between the functionaries who ultimately stuck their investment firms with these loans and

the similar functionaries in accounting and stock-sales firms who fully cooperated with Enron frauds with similarly disastrous results (See the film "The Smartest Guys in the Room.")


Again and again, decade after decade, now; the big money seems to be in making "Dutch Book" between the interests of large financial institutions,

and that of their higher-level managerial staff, who turn out to be very willing to betray the long-term interests of their employers.

Bonus structures focused on the short-term obviously exacerbate those differences (conflicts of interest!),

which are already extremely problematic for ordinary stockholders.


By Russell Johnston