Wall Street Greed: Insiders & Outsiders

...The hustle became so fierce that at one point the Federal Reserve "proposed guidelines for fuller disclosures in bank advertising" but backed off when the banks protested...

...It was not only legal, but moral...

...The exchanges depend upon a mutual trust that they will not be misunderstood and that nothing will be repeated "to uninitiated ears...

...THE YOUNG TOO MAY RE REGARDED as a species of new people with a common experience...

...Consider, for example, another part of the banking forest that presumably has not been overrun by young people of doubtful antecedents...

...Some conservatives," continues Alterman, "appear ready to go the distance with Moon...

...While carefully disavowing his theology, they maintain that his efforts are altruistic ones, dedicated as he claims, to furthering democracy and world peace...

...There would be no need for the Securities and Exchange Commission (sEc), described, with a touch of classconscious poetry in the New York Times by an anonymous money manager, as sitting "at a metal desk thinking everyone with a wood desk is guilty of something...

...Being marginal, they do not fully share in the group's discourse on or off the job...

...On the other hand, Jews have made it into those positions, and when traditional barriers weaken, new opportunities are created for both legitimate and illegitimate careers...

...Finding a scapegoat reassures those committed to existing institutions that, fundamentally, all is still well with their world...

...Then the young push into established positions before their time...

...Scapegoating assures us that sharp practices and illegal behavior are simply matters of individual moral failings or the unfortunate characteristics of alien groups...

...Sometimes the isolating mechanisms break down, as when new opportunities for talented and innovative people arose in investment banking...

...When the monopoly ended the bankers saw, in Bennett's words, "a Darwinian battle for survival" in the hustle and bustle of a new, relatively open market...

...To be sure, using knowledge gained in confidence for one's own personal gain is a species of sharp practice, given the ordinary standards of morality...

...those without the old school tie and who are not "like us" for other reasons—Jews, blacks, women—are not fully accepted...

...When, for example, businessmen relax in their social clubs—the traditional haunts of "a genteel oligarchy"—their talk oils the machinery of commerce, smooths the paths of career advancement, and sometimes allows a shrewd listener to make a killing on the market...

...They are regularly kept in their place—e.g., hospital interns, law firm associates, untenured faculty—until deemed fit to join the trusted circle of colleagues...

...In this respect they differ from other new people, since it is assumed that they have the capacity to "mature" and become worthy of trust—unlike blacks, women, and Jews, who are deemed inherently untrustworthy...

...THIS LONGING FOR A CLASS-BASED ethic is mere nostalgia for something that never existed...

...May we now expect a study of Moon theology in Commentary and a description in the New Criterion of the Moonie struggle against cultural decadence...

...The magazine also reported an anti-Semitic undercurrent to the jokes going the rounds of Wall Street...

...Meanwhile Myron Magnet was worrying in the December 8 issue of Fortune whether "with investment banking now manned largely by the young, is the erosion of ethics here an early warning of imminent trouble elsewhere in business as this generation rises to power...

...an ethic that "turns into social Darwinism, and an appropriate tough-mindedness becomes mere hardness...

...In focusing on the greed of young people and those of dubious social origins, what is overlooked is that greed may well be rooted in institutions of the market rather than in failings of individual morality...

...This was probably inspired by the news that Boesky, a well-publicized contributor to Jewish philanthropies, received confidential information from Dennis Levine, another broker who had himself been indicted a few weeks earlier for insider trading...

...that there may be no real difference between "enhancing profitability" and "greed...

...Before deregulation in the early 1980s, banking was a highly profitable business...

...Only when the "victims" of Boesky and other insider traders were fellow speculators were there cries of moral outrage...

...Obviously one reason there were no blacks and women among the inside traders is that the number of blacks and women occupying positions giving them access to valuable information is minuscule...

...The rest of us must make do with the very small mercy that the present political and social climate has not yet completely eliminated those who sit at metal desks suspiciously watching those at wood deslcs...

...Ethical conduct involves moral choices in relationships with others, but the complaints focus only on one set of others...

...Trust is easiest to establish and maintain when colleagues see each other as being the same kind of people sharing common sentiments...

...145 sibility" may be intrinsic to the functioning of the capitalist market...

...A week before last Christmas AT&T reached out with a fine Dickensian touch and announced that over 27,000 jobs would be eliminated in 1987...

...sexism and racism limit opportunities for whitecollar crime...

...Such conversations are closed to the marginal people who, even in our relatively enlightened age, are still barred from membership in many of these sanctums...

...Because they are not supposed to be making so much money at so young an age, they easily become symbols of greed even when their behavior is unquestionably moral...

...These relationships, like those of their established colleagues, become the basis for enterprises, legitimate and illegitimate, that require mutual trust and confidence...

...Once caught in shady or illegal practices, they become even more conspicuous and their greediness seems confirmed...

...Asked if this was ethical one banker answered, "Obviously we've got to operate in an environment conducive to enhancing our profitability...

...Midge Decter, a neoconservative writer and editor who chaired a panel on terrorism at the conference, insisted that "Moon would not sponsor, at great cost to himself, a conference such as this merely to make himself respectable...

...The problem seems to be that because "investment banking has become so competitive, so dependent on innovation, it has had to open itself to talent more than in the past, when a genteel oligarchy manned it...

...I don't see anything unethical or untoward about that...

...An earnest reader of these ruminations could easily conclude that if only the "genteel oligarchy" had not relaxed its vigilance and let a greedy nouveau element through its gates, Wall Street would not face its present embarrassments...

...New York Times, December 19, 1986...

...So writes Eric Alterman in the October 27, 1986 New Republic...

...The latter got around existing state consumer protection laws and high state taxes by moving their operations to "South Dakota and Delaware in return for lower taxes and considerably less restrictive consumer protection regulations...

...They prematurely ascend to positions of influence and income, and the incongruity between their occupational status and their age makes them highly conspicuous...

...The union leaders no doubt received the sympathy of a. business school dean who is also a private investor and who complained to Fortune's Magnet, "I can't do transactions on the telephone anymore because people do not keep their word...

...It makes more sense to say the young investment bankers have more insight and fewer illusions about the values animating the market than do its would-be apologists...

...Neither did Wriston, who sounded less defensive about the morality of Citicorp moving its credit card business 143 from New York to South Dakota: "Don't we have a moral obligation to our shareholders...

...The announcement "surprised and angered" union leaders who said "they had been assured by AT&T that the planned layoffs would be spread out over the next decade and not all occur in 1987...

...The lack of responsibility goes along with a perspective that "takes the idea of the free market and turns an economic theory into a personal moral code...

...By the same token, new people in a hostile or not entirely welcoming environment find one another and establish their own networks based on their common fate...

...Nor does the question of ethics arise in the case of employees...

...There is more than a little hypocrisy and bad faith at work here...

...Newsweek led its December 1 story with a quote from a Boesky commencement address at the University of California's School of Business Administration that situated greed in the culture of narcissism: "You can be greedy and still feel good about yourself...

...If the sense of responsibility actually does exist, it does not extend much further than "enhancing profitability" for shareholders...

...But insider trading on the scale of a Boesky or Levine requires networks of informants, and their formation is in 144 some measure a consequence of the entrance of new people into established positions...

...and that the lack of "a sense of responStrange Company Last September the Moonies held a "lavishlyfunded, four-day conference on the benign subject of 'Media Responsibility Under the First Amendment...

...In a classic essay on "Dilemmas and Contradictions of Status," written over forty years ago, when women and minorities were true rarities in many professions, Everett C. Hughes observed that among colleagues there is a continual "exchange of confidences" about superiors, subordinates, clients, and the public at large, as well as expressions of cynicism and doubt about their own profession and themselves...

...We had a near monopoly," Walter Wriston, the retired chairman of Citicorp, told Robert A. Bennett of the Times, "and it was lovely...

...The purpose of the sponsorship by the Reverend Moon of conferences and publications and many other things is to further freedom...

...New people, then—the young and Jews today and, with a little bit of luck, women and blacks tomorrow—become suitable scapegoats whose presence accounts for unethical behavior on Wall Street...

...Their very absence—like Sherlock Holmes's observation that the dog did not bark in the night—is suggestive: the youth and ethnicity of the offenders may not be wholly accidental...

...When the others are consumers of banking services, then hustling them with deceptive advertising is not unethical conduct...

...Here, of course, class becomes important...

...If much attention was paid to the age of the inside traders and, more discreetly, their ethnicity, no one saw any reason to comment on the absence of women and blacks from their ranks...

...By these same standards, though, deceptive advertising, moving operations to circumvent consumer protection laws, or suddenly closing plants without notification or regard to the effects on workers and their communities could also be considered sharp practice...

...These new young people "often lack . . . the ethic that belongs not to the business but to the class that once ran it," and the schools they attended did not help them "acquire a strong sense of responsibility for their actions...

...Such young people have a distinct advantage, since they have not yet acquired the trained incapacities of their elders and their more recent formal education equips them with the new skills required in a rapidly changing environment...