"The ‘Subsidy’: How a Handful of Merrill Lynch Bankers Helped Blow Up Their Own Firm
By Jake Bernstein and Jesse Eisinger ProPublica, Dec. 22, 2010, 3:37 p.m.
Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank's own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating.
Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank's money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them. The division creating the securities passed portions of their bonuses to the new group, according to two former Merrill executives with detailed knowledge of the arrangement." [continue reading at propublica.org]