There is no alternative to regulation

The collapse of Lehman Brothers in midst of September 2008 made people become sensitive towards bonus payments in the investment banking sector.We all know that they are different from the ones in middle sized or big companies.
Of course, everyone was aware of the fact that investment bankers receive an especially high remuneration – but until the beginning of the crisis, it did not matter to anyone but a few people outside the sector.
With the collapse of Lehman and the start of the financial and economic crisis, lots of credit institutions had to get back to governmental interventions in order to not break down Lehman style.
It was then that the public realized what the bonus system in the investment sector really was about and how it worked.

In order to understand people’s behaviour or maybe better to get an insight into their motives for action taking it is necessary to put oneself into somebody elses shoes.
Until 2008, investment bankers received huge bonuses in return for their high risk affinity.
And although it was already in 2006 that first reports about investment packages containing bad credits surfaced, they were bought. The majority of investors wanted to make high profits – so that’s what they got.
Consequently, there is no single person that can be blamed.

Why should one stop doing something that already filled his pockets successfully in the past?
Most investment banks survived throughout the support of the respective government, others were bought by their former opponents for unbelievably small sums.
Business continues as usual. That means profits are made and therefore bonuses are paid.
Public opinion and pressure from different parts of society have forced banks and insurance companies such as Goldman Sachs and AIG to reduce their remunerations. But proportionality is something else.
And meanwhile, credit institutions that are less popular with the media continue to increase their bonuses. The proclaimed rethinking initiative is imperceivable.

So for me there is consequently only one way to stop this rat race: regulation.
Nevertheless, in my opinion it is not adequate to point the finger at those receiving the payments. How would we react? Would we not also take the money and try to continue making even more of it? Are our morals so high that we would deny bonus payments in order to save the tax paying citizen?
Sustainability and long-term-thinking are the values that have been promoted by the crisis. Are we sustainable enough not to want to receive the high sums right away? I would not be able to give a 100% answer to that question without eventually betraying myself.

A change in the current situation will only be achieved when everyone becomes aware of his own responsibility. That’s the same for investment bankers.
There’s a small group of Harvard students that wants to introduce an ethical oath for business managers so that they oblige themselves to do business for the good of the community as a whole.
If we are able to integrate this kind of responsibility into the mindset of students and graduates today, we are in my opinion making the first sustainable step into the right direction.