Public Interest

Despite the near collapse of the economy this year, the main Wall Street players in that drama have continued to pay themselves huge bonuses as if nothing had happened. The difference this time, arguably, is that if millions of taxpayers (some of whom are now unemployed) had not come to Wall Street's rescue in 2008 and 2009, there wouldn't be any bonuses to speak of. Can this hubris be explained?

One explanation is that the corporations involved are doing what they were designed to do--make money. If the fiduciary duty of the boards and their managers is to make money, they will make it in the most efficient way possible. That is why the big banks prefer to make massive profits from trading, some of it highly risky, rather than by lending to needy businesses that would then be able to hire back laid-off employees or even create new jobs. They call it maximizing shareholder value. The problem is that if this keeps up, the system will reach the brink of another collapse.


Bruce D. Collins

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