I have spent my entire 20 year working life in the financial services industry and therefore have little or no idea how, in terms of corruption, the industry compares with any kind of global average. Certainly many corporate sectors appear to have their issues, from admissions of bribery by global industrial giants, environmentally sketchy behaviour in mining and resources and, for most, the participation in de facto influence peddling affecting political legislation. Nonetheless, it is also true that I have never encountered a single financial services employee at or above the VP level that has not, as a function of their career ascendance, successfully and frequently averted their eyes from blatant client assreaming. As one example, the travesties of the Syndication process still result in retail brokers being handsomely paid to ram the detritus unacceptable to institutions into the private accounts of their largely ignorant (even if they don’t think so) clients. Inexplicably, this continues after a prolonged period of Syndication-related outrage after the tech bubble imploded.
The root cause of greed in capital markets is immediately intelligible. The flows of money through a global investment bank are so incomprehensively vast that the diversion of one hundredth of one percent of it into a bonus pool is easily sufficient to support a small group of people (ie a trade desk) in a life of obscene luxury. The temptation to do so, easily rationalized after years of Ivy League schooling and 70 hour work weeks in an environment that encourages avarice, is most often too much for mortal humans to avoid. I would suggest that most participants in the OWS would also fail this test of character, but that is possibly just a rationalization for the fact that I did as well.
If we accept that all bank executives are well aware of corruption and weigh outsized compensation as, to some extent, a suitable offset, this can lead to the misguided assumption that the hundreds of thousands of financial services employees represent a unified front against any type of new, more punitive, reform measures. But while there are a disproportionate number of narcissists and psychopaths on trading floors and within broker offices, a good segment of people inside the industry spend a significant amount of time disgusted, both with the actions of the less scrupulous and the bureaucratic structures that encourage them. Who better to know the details on this serial rapistry of the general populace than those who make the accounting entries? Virtually everyone within the financial services industry I have spoken with – brokers, investment bankers, and in institutional sales – have professed a degree of sympathy with OWS that would likely stun the protestors themselves. We have all seen things we were not proud to be a part of.
To date, the primary criticism of the OWS movement from within financial services has been the lack of specific, coherent reform demands. This is, of course, completely disingenuous in that the industry has employed its considerable intellectual capital into disguising the means by which they have been steadily fleecing the peasants. Did we really expect that a group of young, pissed off unemployed would demand tighter bid/ask spreads in the portfolios underlying structured products? Would the industry not have panicked if they did? The answer to the latter question is probably not – the political influence necessary to prevent the enactment of legislation enforcing corrective measures remains intact.
The argument that OWS is pointless because they can’t re-design the banking system themselves is a ridiculous attempt at tactical ambiguity and Orwellian dissembling, one assumes directed at buying time until the New York weather turns icy and whole thing goes away. And to be fair, this remains the most likely outcome barring some type of charismatic leadership that can hone the collected outrage into focused political power sufficient to terrify the heretofore unchallenged hegemony of the K Street bank lobbyists.
The Occupy Wall Street movement is justified on many fronts. An extraordinarily wealthy segment of society, after claiming and accepting the right to operate unfettered after the repeal of Glass Steagal, completely failed to accept the responsibility that this entailed. The fact that a protest movement has not produced a solution to the money/influence construct that has been present since civilization was formed, has little to do with the validity of their cause. And perhaps most importantly, they will find a more sympathetic audience within the banking world than they suppose.