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Article: Economist Stiglitz blames crunch on 'flawed' City bonuses system
- Article from:
- The Independent (London, England)
- Article date:
- March 24, 2008
- Author:
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Copyright informationCopyright 2008 The Independent - London. Provided by ProQuest LLC. (Hide copyright information)
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The Nobel Prize-winning economist Joseph Stiglitz has blamed the
"unconscionable" system of generous bonuses paid to investment
bankers for exacerbating the global credit crisis.
"The system of compensation almost surely contributed in an
important way to the crisis," said Professor Stiglitz, a former
chairman of the President's Council of Economic Advisers, under Bill
Clinton. "The system was designed to encourage risk taking - but it
encouraged excessive risk taking. In effect, it paid them to gamble.
When things turned out well, they walked away with huge bonuses.
When things turn out badly - as now - they do not share in the
losses."
Despite the turmoil in the markets, bank failures and ...
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