What Good Is Wall Street?
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Much of what investment bankers do is socially worthless.
Excellent takedown by John Cassidy for The New Yorker
A few months ago, I came across an announcement that Citigroup, the parent company of Citibank, was to be honored, along with its chief executive, Vikram Pandit, for “Advancing the Field of Asset Building in America.” This seemed akin to, say, saluting BP for services to the environment or praising Facebook for its commitment to privacy. During the past decade, Citi has become synonymous with financial misjudgment, reckless lending, and gargantuan losses: what might be termed asset denuding rather than asset building. In late 2008, the sprawling firm might well have collapsed but for a government bailout. Even today the U.S. taxpayer is Citigroup’s largest shareholder.
The award ceremony took place on September 23rd in Washington, D.C., where the Corporation for Enterprise Development, a not-for-profit organization dedicated to expanding economic opportunities for low-income families and communities, was holding its biennial conference. A ballroom at the Marriott Wardman Park was full of government officials, lawyers, tax experts, and community workers, two of whom were busy at my table lamenting the impact of budget cuts on financial-education programs in Vermont.
Pandit, a slight, bespectacled fifty-three-year-old native of Nagpur, in western India, was seated near the front of the room. Fred Goldberg, a former commissioner of the Internal Revenue Service who is now a partner at Skadden, Arps, introduced him to the crowd, pointing out that, over the years, Citi has taken many initiatives designed to encourage entrepreneurship and thrift in impoverished areas, setting up lending programs for mom-and-pop stores, for instance, and establishing savings accounts for the children of low-income families. “When the history is written, Citi will be singled out as one of the pioneers of the asset movement,” Goldberg said. “They have demonstrated the capacity, the vision, and the will.”
Pandit, who moved to the United States at sixteen, is rarely described as a communitarian. A former investment banker and hedge-fund manager, he sold his investment firm to Citigroup in 2007 for eight hundred million dollars, earning about a hundred and sixty-five million dollars for himself. Eight months later, after Citi announced billions of dollars in writeoffs, Pandit became the company’s new C.E.O. He oversaw the company’s near collapse in 2008 and its moderate recovery since.
Clearly, this wasn’t the occasion for Pandit to dwell on his career, or on the role that Citi’s irresponsible actions played in bringing on the subprime-mortgage crisis. (In early 2007, his predecessor, Charles Prince, was widely condemned for commenting, “As long as the music is playing, you’ve got to get up and dance.”) Instead, Pandit talked about how well-functioning banks are essential to any modern society, adding, “As President Obama has said, ultimately there is no dividing line between Wall Street and Main Street. We will rise or we will fall together as one nation.” In the past couple of years, he went on, Citi had rededicated itself to “responsible finance.” Before he and his colleagues approved any transaction, they now asked themselves three questions: Is it in the best interests of the customer? Is it systemically responsible? And does it create economic value? Pandit indicated that other financial firms were doing the same thing. “Banks have learned how to be banks again,” he said.
About an hour later, I spoke with Pandit in a sparsely furnished hotel room. Citi’s leaders—from Walter Wriston, in the nineteen-seventies, to John Reed, in the nineteen-eighties, and Sanford Weill, in the late nineteen-nineties—have tended to be formidable and forbidding. Pandit affects a down-to-earth demeanor. He offered me a cup of coffee and insisted that I sit on a comfortable upholstered chair while he perched on a cheap plastic one. I asked him if he saw any irony in Citi being commended for asset building. His eyes widened slightly. “Well,” he said, “the award we are receiving is for fifteen years of work. It was work that was pioneered by Citi to get more financial inclusion. And it’s part of a broader reform effort we are involved in under the heading of responsible banking.”
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This one pretty much speaks for itself.
Song - Jump You Fuckers - By Gene Burnett
- "Hey Mr. Wall Street on the 50th floor..."
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Song - Original Version - Visit GeneBurnett.com for artist information...
Jun 15, 2011 at 3:55 PM
Reader Comments (13)
http://www.reuters.com/article/idUSTRE6AP48N20101126
Much of what investment bankers do is socially worthless.
by John Cassidy
http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy?printable=true#ixzz16QCHNu6P
source..hat tip to dylan ratigan...
The electric company matches electric power providers with power users. Ditto the water company and gas company. In essence they are all multiplexing operations, connecting inputs and outputs.
Wall Street matches cash suppliers/investors with cash borrowers/entrepreneurs. It too is a multiplexing operation.
Do electric power company executives pay themselves $144 billion in bonuses? Why not? Everyone knows that electricity is systemically important. Why, there would be martial law and tanks in the streets if the power grid shut down for a day.
Wall Street isn't useless. It's a utility whose workers are vastly overcompensated. If the electric company came out with "innovative electrical products" that provided 100,000 Watts of output for 1000 Watts of input, they'd be dismissed out of hand for blatant scientific impossibility. And yet when Wall Street converts packages of crappy subprime loans into AAA-rated securities, the regulators and lawmakers asleep at the switch can't see the obvious fraud? And countenance the obscene bonuses to boot.
You have to be an idiot to admire Wall Street. It is pure hucksterism.
http://www.businessinsider.com/young-wall-street-analysts-now-getting-paid-220000-300000-to-2011-6
Power production for the purpose of carbon trading is based on generator nameplate rating.... not what that generator actually produced. Wind at best bats at 20% of nameplate and solar is similar.
http://abclocal.go.com/kgo/livenow?id=8193381
And the ponzi/ pyramid scheme rolls on.
http://www.zerohedge.com/article/uk-preparing-return-glass-steagall
[snip]
In a very surprising move, the AP reports that the UK finance minister George Osborne has announced a major overhaul of British banks, the key provision of which will be the separation of bank retail and investment business "in order to help avoid another financial crisis" - an act which is in essence a reintroduction of Glass-Steagall.
Flashback:
Goldman's London banking jobs 'could move to Spain'
http://www.poolia.co.uk/insight/0912-goldmans-london-banking-jobs-could-move-to-spain.html
[snip]
Goldman Sachs is considering relocating 1,000 London banking jobs to Spain, according to a media report.
A number of international banks are known to be unhappy about the government's plans to impose an extra one-off tax on bonuses within the banking industry.
Comment: Go right ahead..... I dare them!
http://www.nydailynews.com/news/2010/01/11/2010-01-11_queens_pol_gary_ackerman_set_up_meeting_between_israel_and_firm_he_owned_stake_i.html
NOTE: His former aid was just caught spying in egypt.............
http://www.yournabe.com/articles/2011/06/16/queens/qns_ackerman_intervenes_20110616.txt