FINANCE | 'Too many have walked away from troubles they created for society' 
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October 21, 2009 
BY ANDREW FRYE 

Billionaire Warren Buffett, who collects a $100,000-a-year salary for running Berkshire Hathaway Inc., said Wall Street pay needs a "downside" when profits deteriorate because of reckless bets.

"You have to put in something where there is downside to people who really mess up large institutions," Buffett said in an interview conducted by Business Wire, the Berkshire subsidiary that posts corporate press releases. "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."
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Warren Buffett said Wall Street needs a "downside" when profits deteriorate because of reckless bets.

(AP) 




Wall Street bonuses for 2009 might jump 40 percent to $26 billion, a year after bad bets on subprime mortgages sent financial firms to the government for bailouts, according to estimates by compensation consultant Johnson Associates Inc. Buffett became the second-richest American by building Omaha, Neb.-based Berkshire into a $150 billion company.

"What you have to change in Wall Street, is you have to make sure that in addition to carrots, there are sticks," he said. "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."

Buffett invested $5 billion of Berkshire's money last year into Goldman Sachs Group Inc., Wall Street's highest-paying and most profitable firm. He said in the interview that the securities industry is essential to economic growth.

"I don't look at Wall Street as 'evil,' " he said. "I look at Wall Street as given to huge excess sometimes."

Banks worldwide reported more than $1.1 trillion of credit losses and writedowns tied to the mortgage meltdown since 2007, according to Bloomberg data.

Wall Street bonuses in 2008 fell 44 percent from the prior year to $18.4 billion, according to the New York state Comptroller.

Goldman, led by CEO Lloyd Blankfein, set aside $16.7 billion to pay employees so far this year. That's enough to pay each worker $527,192. The New York-based bank repaid $10 billion it got from Treasury and reported a jump in third-quarter profit. JPMorgan Chase & Co., which repaid $25 billion of U.S. funds, said profit surged almost sevenfold in the quarter.

Warren Buffett said Wall Street needs a "downside" when profits deteriorate because of reckless bets.