Tuesday, October 20, 2009

Buffett Argues: Wall Street Pay Needs Downside

The billionaire Warren E. Buffett, who is paid $100,000 a year for running Berkshire Hathaway, contends that Wall Street compensation needs a "downside" when profits deteriorate because of reckless investments.

"You have to put in something where there is downside to people who really mess up large institutions," Mr. Buffett said in an interview conducted by Business Wire, a Berkshire subsidiary that distributes press releases, Bloomberg News reports. "Too many people have walked away from the troubles they have created for society, not just for their own institution, and they have walked away rich."

Wall Street bonuses for 2009 may jump 40 percent, to $26 billion, a year after a series of bad investments sent financial firms to the government for bailouts, according to estimates given to Bloomberg by compensation consultant Johnson Associates.

"What you have to change in Wall Street, is you have to make sure that in addition to carrots, there are sticks," Mr. Buffett said in the interview with Business Wire's chief executive, Cathy Baron Tamraz. "And it can't be a one-way street where they are making ungodly amounts of money when things are good and then they move on to someplace else for a while when things are bad."

He added: "I don't look at Wall Street as 'evil.' I look at Wall Street as given to huge excess sometimes."

Mr. Buffett emphasized that there was "plenty of room for improvement."

Go to Article from Bloomberg News »
Go to Video of Business Wire Interview with Warren E. Buffett via PYMNTS.com »