Bankers Exploit Pay Reform Loopholes

[Dealbook] But, no one should be in the least surprised to learn that executives and bank employees have a way to get around the best-laid plans of lawmakers. Using complex investment transactions, commonly called "hedging", they can limit the downside on their holdings, or even profit, as other shareholders are suffering.

The concern with hedging is that executives can easily break the ties between compensation and company performance. Employees who hedge their holdings are less concerned about a falling share price.

Executives have saved millions of dollars by using these tactics. One prominent Goldman investment banker avoided more than $7 million in losses over a four-month period.

And, we'd be willing to bet that these same fine gentlemen and ladies who work so hard to avoid losing income pay every dime of their federal taxes too.