Monday, November 9, 2015

The problem with Goldman bonuses

Beyond the generic problem that bonuses are usually based on an un-risk-adjusted IRR, the problem with bonus for banks in general, and Goldman in particular, is that the government is backing short-term bank borrowing, and so banks can borrow at very depressed rates and make a lot of money on spreads. This seems more like playing the government than playing the market.

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