Sunday, March 22, 2009

Production Regardless of Quality

Financiers at AIG were awarded millions in bonuses based on transactions completed, not the consequences of those transactions.

'I figured my job was to get the transaction done... Whatever came after the transaction - that was on him, not me.'

Incentive pay, commissions, bonuses and incentive pay drove poor quality financial products. Junk instruments ranged from risky credit bets to packaged mortgages. Both blew up to the detriment of many.

Can you envision nurses and doctors saying the same thing? How about teachers or professors? Get ready. President Obama wants to spread the poison of pay for performance to health care and education.

No comments: