Well, if I ever doubted the wisdom of my Guardian on-line piece about bankers and their remuneration, here’s a bit more evidence from Prof Randall Wray in Kansas City!
When a firm approaches an investment bank to arrange for finance, the modern investment bank immediately puts together two teams. The first team arranges finance on the most favorable terms for the bank that they can manage to push onto their client—maximizing fees and penalties. The second team puts together bets that the client will not be able to service its debt. Since the debt cannot be serviced, it will not be serviced. Heads and tails, the investment bank wins.
Read the full article here. There’s lots more interesting stuff on their site as well! Have a look round (after you’ve read all the good stuff here of course!)