Sunday, May 2, 2010

Editorial Note

No good deed goes unpunished.

— Anonymous

My recent exercise in flag-waving seems to have generated some confusion in a few quarters. If I interpret his telegraphic tweets aright1—always a risky business, under the best of circumstances—reader "CorneliusZH" seems to have interpreted my post as an attack on the banking industry qua industry, and that I implied that all its denizens, from lowest recent recruit to highest panjandrum, should be tarred with the brush of anticompetitive, plutocratic misbehavior.

This was not my intent at all.2 Let me be clear: as CorneliusZH wrote, many of the people who work in the investment banking industry are indeed Horatio Alger stories themselves. (For what it is worth, so am I.) Careful readers will recall that I alluded to the current CEO of Goldman Sachs, Lloyd Blankfein, as an admirable exemplar of that very thing.3 I have known very few, if any, colleagues or competitors over the years who have achieved success at (or even entry into) investment banking based on nepotism or anything other, really, than a rare combination of high native intelligence, relentless hard work, and grand ambition. There have been a few people I know who got a start based upon who Daddy was, but they quickly got winnowed out if they couldn't deliver the goods like their peers. (Most of those were hired with the implicit understanding that Daddy would hand out fee business to the investment bank which hired Junior, anyway. Unless they proved themselves otherwise, such quid pro quos were always viewed as temporary investments in human capital only.)4

There was also nothing in my post which should lead a cautious reader to assume I advocate the dissolution of investment banks, the imposition of punitive taxes on finance industry compensation, or the passage of badly written, excessively repressive legislation on the industry itself. Number one, that just isn't in my piece. And number two, have you read anything I've written in these pages over the past few years? Shit, man, carve out a couple days, pour yourself a few beers, and read it. You will quickly find such impressions to be badly mistaken.

I did respond to Mr. ZH by Twitter, but I thought I would share my remarks, in slightly edited form, with you here. I think the thoughts they express are important to convey to a broader audience.

Look, if people want to misinterpret my work, that is their privilege. I cannot control how my words are read. Anyone who cares to can spend a few weeks reading my back catalogue and discover that I am neither a mindless bank booster nor a mindless bank basher. Having spent 20 years of my life in the business, I appreciate it in ways most cannot. It's funny, but the bulk of reactions I have generated over time paint me as an apologist and defender of the banks for that very reason.

Let me be clear: I think both extreme perspectives are wrong, and either lazy or disingenuous. There are not enough hours in the day nor enough money in my bank account for me to try to right the idiocy of the world by myself. Therefore, I write what I write, and biased and lazy readers be damned. If anyone agrees with 100% of what I have said, 99 times out of 100 that means they have not read it carefully. I defy easy characterization, on purpose.

And to respond directly, it pisses the hell out of me that a bunch of lazy, greedy fucks have taken over my industry and crapped all over what was always an imperfect but all-in-all pretty good—and, sometimes, even noble—thing. And they don't even seem to realize it. I am critiquing my industry from the inside, and my primary intended audience is my fellow brethren. I just wish to hell the goddamned bastards would listen. It is their stupidity, not the often mindless rage it has generated, which has screwed up my livelihood and likely will lead to bad regulation, over-legislation, and decades of stagnation.

I pity the stupid and ill-informed. In contrast, I am mad as hell at the assholes in my business who should have known better.

And, for the avoidance of doubt—as my British colleagues like to say—let it be understood that the assholes I am talking about run these businesses from positions of senior executive authority.

* * *

I am a dyed-in-the-wool capitalist and investment banker. Unlike many of my fellow citizens at the moment, I continue to believe both of these are good things, and better than the alternatives. Nevertheless, I acknowledge, apparently unlike many of my blinkered brethren, that there is a good way to run capitalism and investment banks and a bad way. I think the senior muckety-mucks in my industry have done the latter, and I would prefer that they—or someone else with half a brain and a smidgen of humility or even empathy—would realize that, and try to correct the error of their ways before the vastly more numerous fellow citizens outside the industry decide there is nothing worth preserving and burn us all to the ground.5

There. Is that fucking clear enough for you?

1 And if, as he now seems to suggest, I may have misunderstood him, I apologize. But let this be a lesson to you, kiddies: never try to conduct a nuanced conversation about a complicated matter in 140-character bursts. The medium just won't support the message. To be honest, I still can't figure out what CorneliusZH was objecting to in my original post.
2 Frankly, I thought it was a happy, cheerful, optimistic piece. (At least for me.) Just goes to show how you can't control how others interpret your words.
3 It should not require saying so, but I will: my admiration for Lloyd's pulling himself up to the highest levels of global finance by his own bootstraps does not extend to the damage he has done his firm and the alleged injuries he may or may not have visited upon his clients. Capisce?
4 One of the admittedly lesser evils which will result from the calcification of the finance industry into giant, unassailable behemoths untouchable by regulators, markets, or clients—known elsewhere as crony capitalism, which blights vast swathes of the developed and undeveloped world—is that this will change. Not only will Daddy's idiot son get hired at Goldman Sachs, he will end up running the joint.
5 And, given that these muckety-mucks have driven my livelihood into the ditch of public opprobrium, I would appreciate a little humility and openness on the part of all people in the industry vis-à-vis coming to a consensus on proposed solutions. The fact that it was us who cratered our own industry—never mind with how much and whose help—leads me to suggest that it is at the very least impolitic and at the most expressive of an unjustified hubris of the first rank to deny that anyone outside the industry might have any good ideas on how to fix it or even the political, social, and moral standing to propose them. Seriously, if we don't, why should anyone listen to what we have to say about the subject ever again?

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