Stiglitz says bonus culture intensified credit crunch - papers 3 Apr

“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 write-offs amounting to $120bn (£60.5bn), City bonuses will top £6bn thi...