We investigate whether bank performance during the credit crisis of 2008 is related to CEO incentives and share ownership before the crisis and whether CEOs reduced their equity stakes in their banks in anticipation of the crisis. There is no evidence that banks with CEOs whose incentives were better aligned with the interests of their shareholders performed better during the crisis and some evidence that these banks actually performed worse both in terms of stock returns and in terms of accounting return on equity. Further, option compensation did not have an adverse impact on bank performance during the crisis. Bank CEOs did not reduce their holdings of shares in anticipation of the crisis or during the crisis; further, there is no evidence that they hedged their equity exposure. Consequently, they suffered extremely large wealth losses as a result of the crisis.

A box wrench is a simple tool that has no moving parts.

A Skill saw is a tool that is more complex and has many parts, yet is still a tool. You might say that a Skill Saw is a process yet a tool all the same.

If I trade my surplus dried fruit to you for your surplus Pemmican, we are both presumably better off and we have used the tool of investment in capital goods to do so, that is capitalism at its root.

If I really have a huge surplus of dried fruit and my woman makes decent pemmican then I can use the superior pemmican I got from you in my trade and invest it in a more storage pots from Olga the potter, thus next year I can dry and store even more fruit and maybe take another wife so that my labor force grows and I can spread my efforts to other fields.

Understand, Methinks, I am just a simple businessman who sat in a crowd of ignorant college age kids who were chanting “kill capitalism” in response to the goading of an older man who was indoctrinating them.

I did not, and still do not, believe for a minute that you could approach those kids and counter that man's influence by arguing Marx. The only way I can see to do it is to demystify capitalism and show it as the natural process it really is, and to show that capitalism has roots, roots that grow in your bedroom when you get up in the morning, get dressed and go out into the world to profit from your efforts. Without those roots, no capitalism.

No capital, no capitalism.
No profit, no capital.
No surplus, no profit
Only a rare few in this world believe they work for no profit, and they are mistaken.

Where does the surplus come from, and do I have to be Warren Buffet to be a capitalist, when my own efforts produce surplus, profit, capital, which I can then use to invest in the market, the whole thing is a process like the Skill Saw and like the skill saw it is a tool.

Capitalism is a tool, no mystery there.

This is the way I it from a pure street level reasoning of the facts I see in history, anthropology, and personal experience. Perhaps with more education I could say it better, but the facts are there to support what I am saying and the process of human practice of capitalism began so far back in distant history no one can say when that first human brought back food to its den or nest as an investment against having to get up early on the morning to go look for more food.

Everything has a root, a foundation, and it can not be divorced from that root or foundation, they have to be seen as one interconnecting process from beginning to end. Capitalism is no different.

It's more of an illusion actually as if to say “See? See? There's personal accountability here.” While they are making very real incomes in the hundreds of millions despite their performance.

No capital no capitalism.
No profit no capital.
No surplus no profit.

Virtually every single form of life on the planet can be seen to be making an effort to make a natural profit on its efforts in every single endeavor it attempts. Why? Because it is hard wired into life by nature. Nature is random and no form of life can predict what nature will throw at it on the morrow, therefore the hardwired instruction to produce surplus, surplus which will carry life through hard times (hopefully) that will come sure as the sun rises.

We humans with our ability to reason developed the means to produce and store surplus external to our bodies, and once that was learned capitalism became just as inevitable as the sun rising. Stored dried fruit is capital to a primitive. Investing that stored dried fruit into trade that will better the primitive's life is, in my view capitalism.

Once people are at least exposed to the understanding of how natural and basic capitalism is to life, then having them understand that capitalism is a tool and not a creed or theology like socialism becomes much easier and certain.

Blame the man/woman, not the tool.

So far, the only effective method of getting people to favour capitalism I've ever seen is to subject them to fascism and socialism. Nothing cures people faster. As for punishing fraud – always an excellent idea. Unfortunately, government will always use fraud as a pretext for growing its power. If only the world were perfect, eh?

You're expressing yourself as if you think capitalism is a creed or a philosophy, perhaps some sort of theology, and it isn't. Capitalism is a tool just like your wrench or pliers, you can use it to improve your personal security and use it to enrich your life.

Your character is yours, and greed and dishonesty are character flaws which you would have whether you were a socialist, aristocrat, royalty, or tyrant.

A wise man once said that sports do not build character, they reveal it. I submit that we can say the same of capitalism, it reveals character, but that character came from the inculcation and enculturation of an individual not the capitalism.

Like any successful investor, none of the Wall St. Titans were solely invested in their own firms. I can see how they would be willing to play dangerously with a large portion of their own money (even if it is just paper wealth), when they have an equally large share invested conservatively.

The downside of capitalism isn't fraud – it's that there are winners and losers, full stop. I think people hate capitalism when they lose on an investment and want the government to protect them from the losses. They love capitalism when they make a lot of money on an investment. Of course, as with any hedge against loss, the protection from the downside comes at the expense of the upside and most people don't understand how expensive government insurance is.

Money is often seen as security. The more you have, the more secure you feel. It's also often a scorecard for the business. The more you make, the more valuable your creation becomes.

And you still have to explain why after decades there was a sudden coordinated lapse of ethics and responsibility at multiple levels of many different corporations.

Serious risk-assessment mistakes due to seriously wrong signals is the oldest and best explanation. You can blame businessmen for being fooled, but in bubbles they always have been, and they always will be. If you want to fix blame and try to prevent future occurrences, you need to focus on the cause of the misdirected signals, not their consequences.