What I Learned From the NYT Today
Sunday, November 22, 2009 at 04:15PM What I realized today after reading a New York Times editorial on Goldman Sachs is that many more CEOs in the financial services sector than we care to think, when they're home at night in the dark, are convinced they did nothing wrong.
In fact, they have every intention of taking similar risks again.
Why? Because they presume a fundamental truth: the manipulation of financial products is a necessary - even essential - element in a dynamic economy. Because they feel they were justified in receiving government bailouts precisely because their financial strategies make the economy hum. Because the personal rewards of successful risk taking are too great. Because boards of directors still believe in their guts the Milton Friedman dictum that "the busines of business is business" and what's good for shareholders (read 'institutions') is good for all of us.
And in our hearts, even after fulsome apologies, promises of reform, compliant acceptance of a few minimal restrictions on bonuses, we know they will not change.
That's why the apologies seem so hollow, why there is such editorializing about whether an apology is enough. It isn't. Because, I hazard to guess, it's likely a lie.
Apologies, CEOs, Intangibles, Messaging 
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Reader Comments (8)
Sounds a bit cynical. but very likely true.
I am beginning to think that cynicism today may be a healthy perspective.
Boyd -
As a young banker working on early LBO's in the 1980's, I was struck by how important the ego of the investors was to how a deal proceeded. To change perceptions of the markets, we need to consider what goes on inside people's heads.
Coincidentally, I flipped through two books from the library over the weekend:
Animal Spirits by Akerlof and Shiller
The Myth of the Rational Market by Fox
It was interesting to me to see serious examination of the human side of the markets. Maybe there is hope.
Gotta love Lloyd Blankfein:
"We participated in things that were clearly wrong and we have reasons to regret and apologize for." What a weasel. He has reasons to regret and apologize, but doesn't. I'm getting that printed on a mug.
Boyd, Goldman Sach's apology could have been better worded. That's accepted. But I find your outrage overdone. Risk is at the heart of all human progress and success, including banking. The sad fact is that the banks have become a soft target and patsy for the mistakes made during the boom of which we all formed a part and benefited from - not least PR. We need to accept that the sooner the banks get back to their day job, the sooner the rest of all will see the real economy improve (however far removed for the real economy banks might superficially seem to be). I say, we've all had a reality check, but moralistic banker-bashing will get us nowhere. Capitalism was never cosy or risk free, and while we are unlikely to repeat the recent mistakes, ups and downs are part of the show and unavoidable (up to a point, Lord Copper).
Thanks all for the comments: Christine . . . the mug is a great idea. Mary . . . I will take a look at the two books myself. I approach the actions of the market and its participants from the perspective of someone who feels there is reason for mistrust about motives. But I not too old yet to dis miss the idea that with enough grumbling things will move forward. Paul . . . ever the contrarian, your points are noted. I accept them except the one that says my outrage is overdone: Outrage about this stuff is deserved. Oh yeah, I also disagree that the banks are 'patsies'. Some of their senior executives are not patsies but willing, and unrepentant, participants in over-sized risk.
I agree with your post, not only do they think they did nothing wrong, but they are going to do it again. Take a look at this from the Beast on obscurity in financial reporting, http://ow.ly/IkeQ
Thanks for the link to The Daily Beast story . . . nothing like some solid investigative reporting to uncover proof of creative accounting. I like this point: "Trading profitability, albeit inconsistent and volatile, is the quickest way back to the illusion of financial health, as these banks continue to take hits from their consumer-oriented businesses."