Thursday, January 14, 2010

Shameless: Wall Street’s Masters of the Universe


When Adam and Eve, after eating the fruit, discovered they were lost and realized their vulnerability, they were ashamed. When God went to questioned them, they were hiding. Shame, after the Great Recession, seems to be on short supply, both in Wall Street and in society in general. We betrayed our traditional values and made money the measure of humanity, and so it is par for the course that many of the people responsible for the economic mess have shown little or no shame. They made money, and that is what they were supposed to do. Honesty, integrity, and the common good became talking points for the marketing departments with no interference with their bottom line.

Take, for instance, the case of Goldman Sachs. Goldman Sachs made a fortune in the downturn by short-selling mortgage-backed securities like collateralized debt obligations (CDOs). Some would wonder — why get bent out shape, they made a shrewd business gamble and should reap the benefit of their foresight. Except they were the ones who created the same CDOs, sold them to investors, and lobbied rating agencies to give these CDOs high ratings. They also have shown no shame at such practices, which in the early history of our country would have led to tarring and feathering. Quite the contrary, they are proud of it and point to their profits as proof of their good work. And we let them get away with it. We would think that, at the very least, they would be asked to give an account for their behavior. After this we should attach generators to our Founding Fathers, spinning in their graves, and we would light much of the red and blue states for years.

With many of Wall Street’s Masters of the Universe coming this Wednesday to Washington to answer questions from our politicians, will they show signs of shame? We can hope so. Will they be asked hard questions like the ones in this article in The New York Times? Will they at least pretend to have the smallest remorse for their actions for the cameras?

Most likely no, and unfortunately the politicians will not ask the hard questions. They will ask pudgy, soft questions which the financial people will answer with double speak. “The coefficient of risk was miscalculated due to circumstances, which our systemic models could not account for, but since we have recalculated to account the derivative of nonsense.” They will show moral indignation at the Fed’s and the public’s shock at their current large bonuses. After all, they earned it. Right! Right? Or have they lost their sense of right and wrong?

We need a revival of our values as Jim Wallis calls for in his book, Rediscovering Values: On Wall Street, Main Street, and Your Street — A Moral Compass for the New Economy. We need to heed his call to rediscover our values before it is too late. We have to stop thinking greed is an elegant fruit for the connoisseur, but recognize it what it is — a sin.