Some of the proposed questions are technical or even philosophical. These are interesting, but hardly likely to be effective.
I like where Yves Smith is going: what kind of bonuses were paid for trades on which firms ultimately lost money? Bill Cohan and David Walker, coming from very different perspectives, are also pushing on issues related to compensation structure in general and bonuses in particular.
The real issue, of course, is the nature of the risk system itself. But this is a big abstract question – and not suited to these kind of hearings. The Commission needs to find concrete issues that people can relate to much more broadly, and bonuses are very much in the line of fire. The fact that the 2009 bonuses are already in the works – and eerily, but not coincidentally, parallel to the 2007 bonuses – is going to make this hard for the bankers to spin.
Serious debate is just beginning – drill down into how bankers at Too Big To Fail firms really pay themselves, and you will be amazed at what you start to see more clearly.
By Simon Johnson