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Did you ever wonder what this financial crisis taught us? If you did, you probably came to the same conclusion as me: if you don't cheat, steal and bribe, you go down.
As a banker, your job is to manage risk. You borrow money from depositors and you lend it to entrepreneurs and businesses who create jobs. If the difference in interest rates between what you borrow and what you lend is equal to let's say 3%, you can only allow for 3% default per year to break even (without taking into account the salaries and the very expensive offices). Hence, risk management is of the uttermost importance, if you do not want to go belly up, you better be good at spotting good borrowers from goats.
This is how democracies and open markets work, you do a bad job, you go down. Basically, you lose your job and you have a stigma that you did not perform well. In your next job you will have to take on a lower role to show that you are still capable of learning and adapting your frameworks.
But that is an utopia. In today's world, the worst you perform, the better off you are. Basically, all you need to do, is to build up short term profits at the expense of long term losses. In the short term, you reap all the bonuses, millions of dollars, and when the time comes to pay the bill, just walk away, or worse, hold your directors, shareholders and detbtholders for ransom!
The financial structure you created is complex enough such that you are part of the few people who know what it really means. Although it is not that complex, just use some buzz-words like CDO, CLO, CDS, and the amounts involved. Everybody gets scared and they pay you a bonus to stay on board to manage the shit hitting the fan. How fantastic is that! You are paid to build up liabilities that will destroy shareholder value but which generate great bonuses, and then you are paid great bonuses to manage the liabilities.
That sounds like the new definition of banker: bonus management.
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