Book Cover

Capitalism,  The Way to a World of Peace and Plenty


Claw Back

Perverse incentives motivate bankers and brokers in ways that are contrary to the integrity of the economic system.  Tens of thousands of mortgage brokers, for example, were on commission that paid each thousands of dollars to get the client to sign the mortgage. This in turn led to steady loosening of the requirements for a mortgage such as the down payment.

If the mortgage holder faulted on the loan in most cases the broker did not lose the commission. There was no “claw back,” that is, a reversal of the commission. A default? Take the commission on that one back!

This same fundamental contradiction of incentive pay affected “performance bonuses” of bankers. Usually there was no system to reduce the bonus on real world events.  In 2013 millions were still out of work with no homes but Wall Street bonuses were actually up for the year. What an insult!

Ray CareyRay Carey

Ray Carey learned through managing companies for 33 years how to change the work culture to provide employees with their best opportunities to develop and contribute. This experience began as a 28 year old plant manager and later president of an electric motor company, and concluded with eighteen years as president , chairman, and CEO of ADT, Inc.

See Carey's autobiography of his work career in chapter two of his first book,

Democratic Capitalism, The Way to a World of Peace and Plenty.

For more information about Ray Carey and his advocacy of democratic capitalism, visit the pages of this website.