【分析解答题】

"Isn’t it funny/How they never make any money/When everyone in the racket/Cleans up such a packet. " ThatBasilBoothroyd poem was originally written about the movies, but it could just as well apply to banking. In its last three years,Bear Stearns paid $11. 3 billion in employee compensation and benefits.According to its 2007 annual report, LehmanBrothers shelled out $ 21. 6 billion in the three years before, while Merrill Lynch paid staff over $ 45 billion during the three years to 2007.

And what have shareholders got from all this Lehman’ s got nothing (the company went bust). Investors inBear Stearns received around $1.4 billion of JPMorganChase stock, now worth just half that after the fall in the acquirer’s share price. Merrill Lynches shareholders got shares inBank ofAmericaBofA、which are now worth just $ 9.6 billion, less than a fifth of the original offer value. Meanwhile,Citigroup paid $ 34.4 billion to its employees in 2007 and is now valued by the stock market at just $18.1 billion.
All this has reinforced the idea that banking is simply a gravy train for employees. The row over the early payment of bonuses at Merrill Lynch shows yet again that insiders’ interests come first (those toBof
A、staff, however, are likely to shrivel).
The case against banks goes something like this. Over the past 25 years, the cost of finance has been low and asset prices have generally been rising. That has encouraged banks to use more leverage in order to earn high returns on equity. The process of lending money against the security of assets, or trading assets with the banks’ capital, helped to push asset prices even higher.
A、sizeable proportion of the profits that resulted from all this activity was then handed out to employees in the form of wages and bonuses.
But when asset prices started to fall, the whole system unraveleD、Banks were forced to cut the amounts that they had borrowed, putting further downward pressure on prices. The "shadow banking system", which relied on bank finance, started to default. The result was losses that outweighed the profits built up in the good years； Merrill Lynch lost $15.3 billion in the fourth quarter of 2008 alone, compared with the $12.6 billion of post tax profits it earned in 2005 and 2006 combineD、
In effect, executives and employees were given a call option on the markets by the banking system. They took most of the profits when the market was booming and shareholders bore the bulk of the losses during the bust. What about the efforts made to alignthe incentives of employees, executives and shareholders’Employees were often paid in restricted stock and thus suffered heavily when their firms collapsed;Dick Fuld, the boss of LehmanBrothers, was a prominent example. Why then were bankers not more cautious, given the risks to their own wealth
There were two main reasons. First, their base packages (pay and cash bonuses) were sufficiently large to make them feel financially secure. That gave bankers a licence to gamble in the hope of earning the humungous payouts that would take them into the ranks of the .9 her-wealthy. The second reason was that the bankers simply did not recognize the risks they were taking. Like most commentators (including central bankers), they thought that the economic outlook was stable and that the financial system was doing a good job of spreading risk.
Henceforth two things need to be done. The first is that the trigger for incentives( as we11 as the payments themselves) need to be longer-term in nature.Bonuses could still be paid annually but based on the average performance over several years~ if bankers are rewarded for increasing the size of the loan book, their pay off should be delayeduntil the borrower has established a sound payment recorD、The effect would be to claw back profits earned by excessive risk-taking. The second is that the banks’ capital has to be properly allocateD、If trade