One Year Later: Five reasons to still hate Wall Street
Not much has changed since August 2008, when I first described five ways in which Wall Street wreaks havoc. On September 10, 2008, I was on CNBC's Power Lunch discussing whether Goldman Sachs Group (GS) would rescue Lehman Brothers from its perilous condition. Dennis Kneale thought that was a good idea. As for Goldman, not so much. What we didn't know then was that the same doom loop that caused Lehman to perish was working at Goldman as well -- so it was in no condition to do any rescuing.
But thanks to government inaction in the wake of unprecedented costs to society, the five reasons to hate Wall Street are still as true today as they were 13 months ago. Here's how:
1. Rewards employees, not shareholders: Thirteen months ago I objected because the now defunct Merrill Lynch paid 76 percent of its revenues to the people who work there (e.g., in 2006 Merrill paid $17 billion in compensation and its revenue totaled $22.4 billion). As I said then, that pay is linked to revenue, not how much money their deals make for customers. This encourages them to close big deals fast rather than paying attention to quality. It still is -- and Goldman is on track to pay record bonuses in 2009.