THE MOTU ARE A MORAL HAZARD

I guess we can't get rid of all of them but we need to make drastic changes to the incentive structures on Wall Street. Michael Lewis and David Einhorn have a 2-part op-ed in the NYT (part one, part two) that exposes some of these structures and this one happened to be my favorite:

If you work for the enforcement division of the S.E.C. you probably know in the back of your mind, and in the front too, that if you maintain good relations with Wall Street you might soon be paid huge sums of money to be employed by it.

The commission’s most recent director of enforcement is the general counsel at JPMorgan Chase; the enforcement chief before him became general counsel at Deutsche Bank; and one of his predecessors became a managing director for Credit Suisse before moving on to Morgan Stanley.