Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank's money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them. The division creating the securities passed portions of their bonuses to the new group, according to two former Merrill executives with detailed knowledge of the arrangement.
That's just great. When I finished reading the article, I was so angry I wanted to throw my computer across the room. Of course that'd be a whole nose/face situation, so I didn't. If you're ready for a little banker rage, read the whole sordid and well sourced tale on Pro Publica.
If you missed Eisinger & Bernstein's story about Magnetar, and how one hedge fund helped propel the housing bubble read it here. I believe the SEC is now investigating.
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