Friday, April 4, 2014


The speaker was a very senior member of a very big bank and what he had to say surprised me not a small bit.

"Somehow, we have to change the ethics of this business.  Somehow we got away from what bankers had been thought to be and once were.  The emphasis is too much upon profit and not how it is made, and that causes problems across the entire breath of our businesses.

"We can talk  all we want about the changing risk profiles of the various new products with which we deal today, but our risk managers grew up with these products and should at least know how to evaluate these new types of risk.  Yet, there is no question that what happened in the last crisis was an enormous mis-pricing of risk.  How did this happen?  Did everyone forget what they had been taught and learned all at once??  I don't think so.  I think people got caught up in the intense motivation to make a profit that caution was forgotten.  I think people simply lost sight of what they were supposed to be doing because of the money involved.  Products such as derivatives that were originally designed to reduce and mitigate became products in themselves with a lack of oversight at all levels when profitability became the ultimate goal and not risk mitigation."

I've put the above in quotes not because it is a verbatim transcript but simply to indicate what was said comes from a party other than me.  It is, to the best of my memory and now-unreadable notes, pretty close.  It's a pretty damning confirmation of what many of us have thought for a long time and about which many are have written.  So there WAS a culture of greed!  Sure, but there always has been or as that wonderful character Gordon Gecko put it: "Greed is good."  To wish to continually succeed, to make more than before, to outpace the competition; some call it capitalism; some are right.  But behind all of this used to be a moral touchstone; call it religion, call it ethical upbringing, whatever.  When our culture can accept and applaud public acts that not too long ago would have been met with derision, disgrace and dismissal and entertainment that portrays immorality and outright thievery as "boys being boys," what does one expect?  Certainly not any feeling of guilt or self-loathing on the part of participants in real life.  Oh hell, I'm no prude but this is the society we have become and we are not better for it.  We are selfish, self-fulfilling and lacking in any introspection as to our behavior.  It was good to hear that it is finally being recognized at least in one of our banking organizations but it is our society that need changing.  What happens in the money changing halls is just a reflection of life outside.

Again, surprisingly, there was little talk as to solutions but I suppose the organizers realized that, in fact, was a subject for another month.  But the talk was open and aggressive probably because of the fact that certainly not only at this event but for the entire afternoon and evening there was only one representative of the press in attendance, and she kept her counsel.  More of these things should be done in environments such as this and one wonders why not?  I would hate to think this was just an Old Boys get-together but maybe it was.  Anyway it was good to see that this thought of thinking is going on.  I remain positive as to the future… Happy Final Four

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