It may seem a bit obvious to point it out but the current turmoil in the financial world is not a natural phenomenon like a hurricane, but entirely mad made. Let me be a bit more specific – the responsibility for the mess – be it at Lehman Brothers, Merrill Lynch, Freddie Mac or Fannie Mae lies fairly and squarely with the senior executives of these businesses. And these executives have not only culpably mismanaged the affairs of their companies they have deceived the public along the way.

This is what Fannie Mae (still) says on their website about their corporate responsibility “Fannie Mae provides stability, liquidity, and affordability to the nation’s housing finance system under all economic conditions.” How about the bankrupt Lehman Bothers? This is the garbage that they have been flogging us: “Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide.”

Stability? Liquidity? Innovation? Serving needs? Don’t make me laugh! The needs that the high-priced-help at these and the other parasitical and arrogant Wall Street   “institutions” have been serving have been their own needs. It is a fact that the indefensible reward systems that the executives of these snake oil selling firms have created for themselves have been at a time coincidental with the period of their greatest irresponsibility. In 2006 Lehman Brothers paid their staff an average of $335,441 each. Yep, that’s the average. Lehman Brothers then Chairman and Chief Executive Richard Fuld Jr. received a nice little $13.75 million cash bonus for his work in 2005. And what was the justification for all this. Risk. Not risks for them, of course, they were fireproofed by their earlier gluttonous receipts. But risks in the market place. Because to push your head a bit above the parapet and earn an even bigger bonus you need to take a bit more risk than the next man – or the next investment bank.

The executives who got us all in the unholy mess in which we now wallow never played with their own money – they didn’t need to. They mismanaged (as it turned out) not because there was a bias for probity and caution but because there were rewards for those prepared to gamble. It was never the gambling directors who suffered (and nor is it now) it was, and is, the other “dumb” stakeholders; the Pension Finds, the individual investors who bought the lines of the men in the smarter suits – the suckers who could least afford to lose.

And as summer on The Hamptons draws to a close I wonder how many of the City slickers resting there, the modern day Sherman McCoys, feel that their individual vanities are at risk of being bonfired? Or that they ought to be wrestling with their consciences. Not many I guess. 

Be Sociable, Share!