For guidance on banking and perverse incentives that lead to dumb decisions, I turned to Harvard professors Shawn Cole, Martin Kanz and Leora Klapper. He started with them when they were small, he had a personal loan officer, but then they got bigger, and eventually, of course, they got bought by a really big bank. Well, the new big bank comes in, and the new loan officer comes to see Herk. The loan officer explains that his own compensation, his bonuses are based on assets under management that he brings to the bank. You can be the CEO of the big bank or the loan officer or you can play Herkimer.

Source: thestar September 04, 2023 15:56 UTC