The public will almost certainly be shocked at the report. It it likely to cause members of Congress and the Administration to consider plans to limit executive pay or at least have some part of it put in escrow to cover potential future losses at the firms.
What the report will not likely address is that some of the divisions at the largest banks were critical to their survival when losses from derivatives nearly swamped some of them. The TARP program was necessary to pull a number of financial firms back from the edge of insolvency. But it was not their only positive contribution.
M&A departments, investment bank operations and trading desks often continued to make large profits. These did not offset large losses from illiquid assets entirely but they did lessen the P&L effects of bad bets made due to the belief that the housing market was nearly invulnerable to a sharp drop.
A banker paid $10 million for making a $100 million profit for his firm may have been the most valuable employee at his bank
Douglas A. McIntyre
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