Do labor markets discipline? Evidence from RMBS bankers
John M. Griffin, Samuel Kruger, Gonzalo Maturana
Journal of Financial Economics · 2019 · Volume 133 · Issue 3
DOI: 10.1016/j.jfineco.2018.11.005
Abstract
This paper examines whether employees involved in residential mortgage-backed security (RMBS) securitization experienced internal and external labor market consequences relative to similar non-RMBS employees in the same banks and why. Senior RMBS bankers experienced similar levels of job retention, promotion, and external job opportunities. Even signers of RMBS deals with high loss and misreporting rates or deals implicated in lawsuits experienced no adverse internal or external labor market outcomes. These findings are likely not explained by targeted or delayed employee discipline, small legal fines, or protection due to pending litigation but are consistent with implicit upper-management approval of RMBS activities.
Keywords
Labor market discipline, RMBS fraud, Financial crisis
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