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53% Of Bankers Say Ethics Inhibit Career Progression - Here's Why
The Economist found, rather sadly, despite all the glad-handing and happy-talk, that 53% of financial services executives believed that strict adherence to ethical conduct would make career progression difficult. As this former Wall Street trader told The Guardian, "a precedent needs to be set, to slow down Wall Street's wild behavior. A reminder that rules are there to be followed, not exploited." The reason, among others, is summed up by the following, "if a customer wants a red suit, you sell them a red suit. If that customer is Japanese, you charge him twice what it costs."
My first year on Wall Street, 1993, I was paid 14 times more than I earned the prior year and three times more than my father's best year. For that money, I helped my company create financial products that were disguised to look simple, but which required complex math to properly understand. That first year I was roundly applauded by my bosses, who told me I was clever, and to my surprise they gave me $20,000 bonus beyond my salary.
The products were sold to many investors, many who didn’t fully understand what they were buying, most of them what we called “clueless Japanese.” The profits to my company were huge – hundreds of millions of dollars huge. The main product that made my firm great money for close to five years was was called, in typically dense finance jargon, a YIF, or a Yield Indexed Forward.
Eventually, investors got wise, realizing what they had bought was complex, loaded with hidden leverage, and became most dangerous during moments of distress.
I never did meet the buyers; that was someone else's job. I stayed behind the spreadsheets. My job was to try to extract as much value as possible through math and clever trading. Japan would send us faxes of documents from our competitors. Many were selling far weirder products and doing it in far larger volume than we were. The conversation with our Japanese customers would end with them urging us on: “We can’t fall behind.”
When I did ask, rather naively, if this was all kosher, I would be assured multiple times that multiple lawyers and multiple managers had approved the sales.
One senior trader, consoling me late at night, reminded me, “You are playing in the big leagues now. If a customer wants a red suit, you sell them a red suit. If that customer is Japanese, you charge him twice what it costs.”
I rationalized that our group was careful by Wall Street standards, trying to stay close to the letter of the law. We tried to abide by an unwritten "five-point rule": never intentionally make more than five percentage points of profit from a customer.
Some competitors didn’t care about the rule. They were making 7% or 10% profit per trade from clients, selling exotic products loaded with hidden traps. I assumed they would eventually face legal charges, or at least public embarrassment, for pushing so clearly away from the spirit of the law.
They didn’t. Rather, they got paid better, were lauded as true risk takers, and offered big pay packages to manage similar businesses.
Being paid very well also helped ease any of my concerns. Feeling guilty, kid? Here take a big check. I was, for the first time in my life, feeling valued for my math skills – the ones I had to hide throughout my childhood, so as not be labeled a nerd or egghead. Ego and money are nice salves for any potential feeling of guilt.
After a few years on Wall Street it was clear to me: you could make money by gaming anyone and everything. The more clever you were, the more ingenious your ability to exploit a flaw in a law or regulation, the more lauded and celebrated you became.
Nobody seemed to be getting called out. No move was too audacious. It was like driving past the speed limit at 79 MPH, and watching others pass by at 100, or 110, and never seeing anyone pulled over.
Wall Street did nod and wave politely to regulators’ attempts to slow things down. Every employee had to complete a yearly compliance training, where he was updated on things like money laundering, collusion, insider trading, and selling our customers only financial products that were suitable to them.
By the early 2000s that compliance training had descended into a once-a-year farce, designed to literally just check a box. It became a one-hour lecture held in a massive hall. Everyone had to go once, listen to the rushed presentation, and then sign a form. You could look down at the audience and see row after row of blue buttoned shirts playing on their Blackberries. I reached new highs on Brick Breaker one year during compliance training. My compliance education that year was still complete.
By 2007 the idea of ethics education fell even further. You didn't even need to show up to a lecture hall; you just had to log on to an online course. It was one hour of slides that you worked through, blindly pushing the “forward” button while your attention was somewhere else. Some managers, too busy for such nonsense, even paid younger employees to sit at their computers and do it for them.
As Wall Street grew, fueled by that unchecked culture of risk taking, traders got more and more audacious, and corruption became more and more diffused through the system. By 2006 you could open up almost any major business, look at its inside workings, and find some wrongdoing.
After the crash of 2008, regulators finally did exactly that. What has resulted is a wave of scandals with odd names; LIBOR fixing, FX collusion, ISDA Fix.
To outsiders they sound like complex acronyms that occupy the darkest corners of Wall Street, easily dismissed as anomalies. They are not. LIBOR, FX, ISDA Fix are at the very center of finance, part of the daily flow of trillions of dollars. The scandals are scarily close to what some on Wall Street believe is standard business practice, a matter of shades of grey.
I imagine the people who are named in the scandals are genuinely confused as to why they are being singled out. They were just doing what almost everyone else was, maybe just more aggressive, more reckless. They were doing what they had been trained to do: bending the rules, pushing as far as they could to beat competitors. They had been applauded in the past for their aggressive risk taking, no doubt. Now they are just whipping boys.
That's the paradox at the core of the settlements we're seeing: where is the real responsibility? Others were doing it, yes. Banks should be fined, yes. But somebody should be charged. Yet the people who really should be held accountable have not. They are the bosses, the managers and CEOs of the businesses. They set the standard, they shaped the culture. The Chuck Princes, Dick Fulds, and Fred Goodwins of the world. They happily shepherded and profited from a Wall Street that spun out of control.
A precedent needs to be set, to slow down Wall Street’s wild behavior. A reminder that rules are there to be followed, not exploited. The managers knew what was going on. Ask anyone who works at a bank and they will tell you that.
The excuse we have long accepted is ignorance: that these leaders couldn't have known what was happening. That doesn't suffice. If they didn't know, it's an even larger sin.
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It's the blue collar workers' fault. Too greedy wanting to eat. And ethics are for chumps. The strong survive. -Ayn Rand.
"Ayn Rand opposed the morality of self-sacrifice, which is inherent in most philosophic systems and all religions. She advocated instead a morality of self-interest—the Objectivist ethics—which, as she explained in her essay 'Causality Versus Duty,' is neatly summed up by the Spanish proverb 'God said: ‘Take what you want and pay for it.’'” http://www.theobjectivestandard.com/blog/index.php/2010/12/the-beauty-of-ayn-rands-ethics/
Behold the result. "Doing God's work." -- Lloyd Blankfein.
LTER I hear your message but the author of this "story" is a total fuckin fraud. I am in this business. I left a big firm at 25. Me and a partner wanted to be independant. We wanted to give advice without being handcuffed. We ended up at a large firm who promised us that. As soon as we started rolling we got pulled aside by upper management. We were using competitors products. It turned out that our health coverage, 401k, stock incentive plan and overall compensation was tied into selling proprietary products. Everyone there drove a benz. So the message was clear. Do it their way, at the clients expense, and you will be hooked up.
We fuckin left immediately. My health coverage is now 3x what it would have been. I have no 401k or other ancillary benefit that an employer contributes to. But I sleep at night (or I did anyway until QEinfinity but thats not the point).
Sure the bigshots up top should be strung up by their balls, agreed.... but asshole faces like this douche who banks those checks and then thinks he can absolve himself by exposing the system he absolutely was complicit in are just as big of a piece of shit as those he complains about.
Kudos, Fonz.
Hard to give a fuck about ethics when you own all branches of government.
After seeing the definition of a sociopath.... Atlas Shrugs.
LTER, get over your rand fetish, already.
either that, or you two should get a room.
Cover meet Ass.
We will see more rationalizing duplicity.
Bet on it.
Yeh, LTER, I understand your point, but I don't think Rand would approve of banksterism, since crony capitalists are the largest single class of moochers and looters in existence. They're parasites on the ass of society, much like the Wesley Mouches and James Taggarts that appear in her writings.
Exactly. Taxpayer-funded bailouts would have made her apoplectic.
" but asshole faces like this douche who banks those checks and then thinks he can absolve himself by exposing the system he absolutely was complicit in are just as big of a piece of shit as those he complains about."
Only God can forgive sin and perhaps this guy is on the road to genuine repentance or not, I don't know but clearly the culture of finance is corrupt and the disinfectant of light shined on the subject is a healthy response. As the system implodes every individual involved will have to make his own choices and live with the results. There will be a day of judgement where eveyone will give an account to God.
dup sorry 4 beer keyboard smash
Hopefully you have more than two left.
Not all financial advisors are evil. Just the ones in charge. There was a time (the "before Bernanke time") when people who were knowledgeable about the market could help those who were not. I have several financial advisors in my building and they are all complete assholes. And their shit stinks (literally -- I use the same bathroom with one group and these fuckers can't even bother to flush).
yeah man most of the people i run into in this biz are just awful. they cheat their wives and their clients and just make sure to show up at church on Sunday and look the part, Disgusting people with no morals. I know maybe 3 people total that i would not categorize like that.
It's like most professions. The greedy unethical Rand following salesmen types have pushed out the people who actually want to add value and succeed by helping their clients as opposed to milking them dry for their own short-term profit. People without ethics build iShit in China to make more money today, not worried about the fact that the consumer can't buy their iShit tomorrow. Even the computer science guys are learning this lesson, though most don't see it. Yet.
Henry Ford may have been an asshole, but he understood that his key to success was building a product his workers would buy, and paying them enough to buy it. Same with Sam Walton before his Rand loving entitlement-minded ethics-free iHeirs took over.
Junked you because you have no understanding of Rand ,, go back and read the "Virtue of Selfishness" again ... or any of her novels ... all her heroes acted in their self interests but they acted ethically.
"I know maybe 3 people total that i would not categorize like that."
Obviously you need to move in different circles.
Nay, Blankfein et al, are: "Take what you want and make the taxpayers pay for it!"
Blankfein et al. sure don't see the average taxpayer as the productive class, so yes. We are fuel to their ethic-free fire. Which is ironic, because we are the goose that laid their Golden Egg. But Rand only cared about East Egg.
LTER, that was confused and intentionally misleading.
The words in your first paragraph were not Rand's own view at all. I don't have a copy of "Atlas Shrugged" on my desk, but I'd be willing to bet that she put them in the mouth of a character like Wesley Mouch, one of the statist antagonists. She was arguing against people who think that way. If you're going to criticise her, at least criticise her for views she actually held.
The link you provided in the second paragraph describes her views on ethics reasonably well. If you understand her well enough to have read (or at least Googled) an article like that, I'm surprised you'd feel you needed to stoop to misrepresenting her as you did.
As for Blankfein's bizarre line about "doing God's work", you are well aware that Rand was an atheist through and through. Assuming Blankfein meant it literally, and wasn't just being sarcastic or flippant or metaphorical, Rand would have been the first to call bullshit.
I don't find "doing god's work" bizzare or flippant at all. i like to bash the gold team as much as the next insect, but i understand completely what he was saying. the true believers in globalization are convinced that modernization of all the world (good food, clean water, modern infrastructure, western style goverment) would benefit so many that the ends justify the means. in any endeavor this size, there is going to be lots of bad, corruption, profiteering, self dealing, etc. but i think the big boys really believe in what they are trying to do. kind of like the nazis
"Buyers who didn't fully understand that they were being ass raped and should thank us for it..."
Fucking bankers, hang the lot of them and their worthless investment instruments.
Honestly, fuck them all to Hell and back drug behind a draft horse in chains.
Yeah, you are obviously more valuable to society by promoting murder. Fucktard.
OOOOOH more worthless, illiterate fucks are downvoting me!!! Oh dear!!!! STOP BLAMING OTHER PEOPLE for your problems. It's really not that hard. Most "banksters" are good people. Doing their fucking job. Just like you and everyone else.
I didn't down vote you.
What good do bankers do for society?
Pay interest on savings? Make responsible loans using capital versus depositor savings leveraged 30 to 1 on CDS and MBS?
C'mon, get a grip, look in the mirror.
Not to mention free money from taxpayers via the corrupt FED.
Jesus H., what hole are you living in?
Banks, and therefore bankers, do a lot for society. They have provided the means for people who haven't had the ability or foresight to save for their entire lives to save for purchases they otherwise wouldn't have been able to make like houses or starting a small business.
Most industries are subsidized by the government somehow. Is everyone working in one of those industries now deemed a bad person deserving death?
I don't understand the complete ignorance of reality. Such a focus on this one class of people, "banksters", is just worthless scapegoating. And it borders on the type of thinking that leads to wars.
Yeah, sure they are. Fuck you. The egregious abuses of trust committed by these felons and their complicit sycophants at the regulatory agencies and in government have been well documented here and elsewhere for years.
Every industry has corruption. So these arguments apply to everything.
BS We have ALLOWED THIS BEHAVIOR, and everyday we accept it more until "we" don't.
I guess I am ahead of the game.
UNACCEPTABLE.
I will do what I can in my way.
Saying their behavior is unacceptable is about as effective as john ketchup 'deploring' some foreign government's actions. If you have an infection, you treat it. Depending on location, severity, and duration, that may involve peroxide, antibiotics, or amputation. The bankster infection is to the point of amputation now. The only further remedy is death of the host. Who would argue against treatment?
Bunz,
This is a group that blames seniors for paying into Soc Sec.
My job isn't to fuck everyone who comes into range. "Most bankers are good people"......Haaahaaaa They'll knob you laughing to those words.
What a cunt.
When you're in trouble, the password is......
25%.....
Regards.
Yep, plow a fucking field with those bastards.
There is no fucking ethics in the US period! When presidents blatantly lie to the faces of all Americans, why do we expect anything more from Wall St! The fucking problem is Americans in general, where 99% of people would fuck over their Grandma in a minute!
In my experience, Americans are downright Righteous compared to most other countries.
Yep - That's what this article says too! As long as I perceive myself somewhere above the bottom deck. . .
Yep - That's what this article says too! As long as I perceive myself somewhere above the bottom deck - I'm righteous enough to commit more evil.
Thanks for the confession, now go and sell all you have and give it to the poor and follow Jesus. But the rich young banker could not do that. He could could confess but not give up his ill gotten riches.
Wow asking the ex-wall street traitor to give back his ill gotten gains gets down votes. Only on ZH. Or is Jesus hate speech now.
You Jews talk way too much. Your rhetoric makes us HATE you. You steal bread from the starving. You hold your book you call a bible in one hand and a knife in the other, quick to stab the unwitting man in the back after you scam him of his life savings. Get the fuck out of here you piece of smelly shit.
You will be surprised by the religious stuff coming down the pike, most fake, some real. Be Discerning in these days friend.
There is a difference between the Bible of Jews and Christians. Really.
The Messiah the Jews rejected and then crucified had a few things to say about money changers and those who made money their 'god'.
Yeah, try defining ill gotten please. Name any single damn profession that doesn't take advantage of people. OH WAIT, THERE ARE NONE.
I am simply making a point, this guy confesses to wall st corruption but do you think he will give back one dime. No, as he said he did not steal as much as others so he is the good guy.
Right, just like when you do your job, whatever it may be, you are getting paid something when someone else may do it for less. This is the same principal. People who offer financial instruments that are profitable are taking money for something that is worth less than what they are selling. That is the basis of any economy. You sell something to customers for a profit. Making a profit is dishonest at it's core - no matter how you do it. Does a contractor tell his customer how much profit he makes? No, I didn't think so. Does a farmer tell his customer how much profit he makes? Noooooo....everyone is trying to make what they think they CAN. Not what they need. Therefore, they are taking advantage of their customer. It doesn't matter what job you have, the majority of people are in it to win, not to be fair.
Okey Dokey.
No, it's not okey dokey. I haven't been in the business in 20 years, but we knew what was reasonable and what was not; and when we could get away with the unreasonable, we even had a term for it, 'Tearing the guy's head off'.
bunz - if you don't understand the difference between a fair and reasonable profit and "taking advantage of people", then there really is no debating with you.
Right, because there is an acceptable profit line somewhere. Obviously I missed that in the big-list-o-morals that you were taught. I guess your opinion on morality is the only one that matters. Congrats on that.
How do you even think you are being logical? There is no discrete fair/unfair measurement on anything.
edit- never mind you're a bankster.
What? Making a profit is not the same as rape.
You sell something to customers for a profit. Making a profit is dishonest at it's core - no matter how you do it. Does a contractor tell his customer how much profit he makes? No, I didn't think so... everyone is trying to make what they think they CAN. Not what they need. Therefore, they are taking advantage of their customer.
Does the employee tell his employer how much he 'needs' when negotiating his wage? Or does he ask for as much as he can, which the employer may or may not agree to, depending on how much value the employee will add to whatever it is he's doing? Like most people who have been brainwashed by the state into accepting the moral basis of 'progressive' taxes, you're deeply confused about the nature of profit (as well as value, whch is subjective and up to the buyer of a product/service to determine for him/herself).
Profit isn't what a seller has 'taken' from the buyer; in a competitive and voluntary market, profit is what buyers freely decided is the amount of 'value-add' the seller added to the raw materials/time/expertise required to finance/create/distribute/guarantee a product; if the buyer didn't think the premium over the raw materials/etc was worth it, they could buy from someone else or make it themselves. In a voluntary and competitive market.
Of course, the banking industry isn't really a voluntary or truly competitive market because it is - in essence - a government-imposed cartel of counterfieters. But the answer isn't to string up bankers, who are only responding to the incentives created by government; it's to get rid of fiat currencies, deposit insurance, and allow banks to fail when their bets go wrong. ie, it's up to us, the people who understand the system, to educate those who don't, so the electorate will vote for people who will represent us rather than the finance industry.
It doesn't matter what job you have, the majority of people are in it to win, not to be fair.
Horseshit, though I can see why you have this view given your other errors. When I sell a product/service to a customer, I charge as much as I can, ie, the market rate; it's up to him to decide if the price I charge is worth it, or to find someone else to do provide it. The 'fairness' comes from me delivering what I promised, and standing by the product/service if there's any issues with it, not in how much I charged in the first place.
You rationalize like a bitch. It is people like you that have created this fucked up situation. You are the epitomy of an egg sucking weasel. Good job fuck nut!!
It takes a very brave soul to opt for "live in a van down by the river" http://www.barnhardt.biz/about/
So of course, upon baring your soul, you gave your "earnings" back to those you helped scam?
I'm extremely short on patience for little dickheads seeking forgiveness these days, you'll have to seek both from a higher authority than me.
I have no patience, forgiveness or mercy to offer for the likes of you.
Damn right fuck this guy. Sounds eerily familiar in history to hear someone ask forgiveness and plead ignorance for just "following orders".
Ethics, law and order, crime prevention and justice are all forms of government intervention, holding down rich sadistic people with sociopathic intents. I hope we come to our senses
The Classics can teach us much.
http://www.triviumeducation.com/
I studied the classics a bit, but the best was ancient art history.
I remember the class being stumped on the meaning of the roman pantheon. https://en.wikipedia.org/wiki/Pantheon,_Rome
It was the "Occulis" repesenting the "center" of the empire. (Thats the hole in the roof)
HMMM
I believe I stood under one in DC.
On a side note, Have any of you been to the spot in the Capitol building under the dome where you can hear far away? It exists.
"Just a whisper of truth if you have been there."
All these government and military officials swear to uphold the constitution, yet many are nullifying it with intentional treasonous behavior.
An apt title taken from a film starring my most favourite actor James Mason and which resonates with this whole ponzi shooting match would be ' The Shitting Gallery '.
"if a customer wants a red suit, you sell them a red suit. If that customer is Japanese, you charge him twice what it costs."
If that customer is a muppet, well, they´re just road kill. Inserting famous ZH .jpg below.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013...
One day, the "titans of finance" will be dragged through the streets before they are disemboweled, gutted, burned at the stake, and have their heads stuck on top of stakes, as a reminder to people to have some morals, ethics and standards.
Greed is better than good. It's forking great! What a jizz to screw people out of hard earned cash! Greed is an end in itself, not a means to some abstract goal like "success"
Whoever dies greediest dies best
This is corruption and this is how the corrupters live.
Richard S. Fuld Jr. of Lehman said. “I take it as a personal failure to lose money.”
Here’s a vignette of that Richard Fuld, who "early in the morning of March 17, 2008, departed from his twelve-acre Greenwich estate with its twenty rooms, eight bedrooms, a tennis court, a squash court, and a pool house –one of five he owned—to be chauffer-driven to deal with a possible run on banks and the bankruptcy of Bear Stearns, the smallest of Wall Street’s Big Five investment houses."
Richard Fuld who, among past winners of Fed largesse and insider information soon to be the token sacrificet along with Ken Lewis, on that morning was headed “right onto North Street toward the winding and narrow Merritt Parkway, headed for Manhattan”…starring “out the window in a fog at the rows of mansions owned by Wall Street executives and hedge fund impresarios,” as described by Andrew Sorkin in Too Big to Fail.
Where “most of the homes had been bought for eight-figure sums and lavishly renovated during the second Gilded Age, which, unbeknownst to any of them, lest of all Fuld, was about to come to a crashing halt.”
Sorkin continues…
“Just as his car merged onto the West Side Highway, heading south toward Midtown Manhattan, Fuld called his longtime friend, Lehman president Joseph Gregory. It was just before 5:30 a.m., and Gregory, who lived in Lloyd Harbor, Long Island, and had long since given up on driving into the city was about to board his helicopter for his daily commute (Gregory’s primary address was in Lloyd Harbor but he owned several other properties, include a 2.5-acre oceanfront estate in Bridgehampton and an apartment at 610 Park Avenue on Manhattan’s Upper East side). He loved the ease of it. His pilot would land at the West Side Heliport, then a driver would shuttle him to him to Lehman Brothers’ towering offices in Times Square. Door to door in under twenty minutes…”
Introductory Quote:
"Size, we are told, is not a crime. But size may, at least, become noxious by reason of the means through which it was attained or the uses to which it is put." --Louis Brandeis, Other People's Money: And How the Bankers Use It, 1913
Stupid Flanders.
"53% Of Bankers Say Ethics Inhibit Career Progression"
Shocker.
This is news?
The other 47% agree, but are too clever to admit it in a poll.
Ethics for dummies . Buy it on my website
Don't shit where you eat, fools.
"The excuse we have long accepted is ignorance: that these leaders couldn't have known what was happening.
That doesn't suffice. If they didn't know, it's an even larger sin."
To the author...
You expose yourself.
And while your confessional is quite pathetic, it serves no one.
Maybe highly paid regulators would help clean things up? Annual salaries exceeding the highest CEO salaries.
Sounds like another porn-watching government job. But with higher pay.
If you want to be rich , you have to put ethics aside.
Hmm. Ethics don't seem to hinder a career in politics; why don't they switch to that?
Damn I guess that's why I never went very far in banking. Unwilling to fuck my fellow man for a buck.
Here's where the ethics comes in:
If you know the Buyer is color blind do you sell him a blue suit and tell him it's red. Which is getting close to the Emperor's cloths thing.
53% of bankers pretended to know what the word "ethics" meant when asked the question.
fuck you.
The other 47% are lying.
Edit: Credit should go to SDShack above who beat me to the punch line.
but sir red suits are out this year
our new line is gamma green with three sleeves
"It was like driving past the speed limit at 79 MPH, and watching others pass by at 100, or 110, and never seeing anyone pulled over."
Yeah, like Guy doing 186mph (300kmph) on the autobahn on his bike gets casually passed by an Audi RS6. LOlz http://www.youtube.com/watch?&v=vijRI4nA088
Meanwhile in the U.S. http://www.youtube.com/watch?v=hTvtkUPjgXk
Generals don't fight/kill people; CEOs don't cheat/steal money - sociopathic suckers do it for them. So suck it up and blame no one but yourself for your own greed, when you take the fall - you made your bed, you lie in it.
The punishment for ethical failure should be commercial failure. The customer should wise up to being sharped and demand transparency, or cease dealing with the firm entirely. There is no reason, save cowardice, for subsidising or enabling institutions who bankrupt themselves taking risks, making bad calls or blowing up their customers.
I'm not sure whether we should be prosecuting CEOs for promoting shitty business culture, but they definitely should be bankrupted for it. Artificially keeping the business alive, and by extension its managment and business practice, is the ultimate positive reinforcement of the culture itself.