1.
Why did you leave Goldman Sachs to become a
writer?
2.
And I think along the way, I realized that I
just really don’t feel in tune with what’s going on inside Wall Street firms
with how things get done. With the sort of emptiness of the pursuit and the
competition for making money, there was a lot of, in general, the bureaucracy
that’s involved, the power plays that are involved, at some point I think I
personally did not feel I wanted to be a part of that world and there are other
external factors that took place as well for me, 9-11
really was one of the things that really got me to take stock, I think
for a lot of people, in life, I was down on Wall Street at Goldman Sachs when
that happened and at that point, I think it was like, well, I kind of don’t
want to be here anyway and life’s too short and I really would rather do
something that’s more fulfilling and perhaps, for me, and more enriching in
general, than being a banker and making money on Wall Street.
3.
Do you feel it requires a great deal of
intelligence to work on Wall Street?
4.
I think it requires a
great deal of stamina and a lot of backbone. It’s not an easy place to work,
especially the higher you get in a firm, the more internal political battles
become part of your day to day life. The more there is trying to take
credit for certain trades versus other people in the firm trying to take credit
for them, and all these tiny, little aspects of power plays that really take
place and that requires to some extent, an intelligence, but also, the kind of
backbone and the kind of real stamina and energy to deal with those kinds of
day to day realities on Wall Street. It helps to be intelligent or quick
minded, but it isn’t like Wall Street is rocket science. I mean, the reality is
that how the rest of the world sees what Wall Street does seems to make it more
complex than it really is inside. Things aren’t actually as complicated as
they’re painted to be, I think, on the outside.
5.
Do you feel that women have as much control as
men do?
6.
I think that for anyone to have control in the banking
industry, you have to be willing to fight and also play that same game, and
unfortunately it is a game, rising in Wall Street is a game. It is positioning,
it is strategizing, it is being good, it is being right, it is aligning with
the right senior people who are moving up the chain, too. Because whether a woman or a man is attached to a particular
manager, if that manager is not rising in the firm, they’re not going to do as
well going forward probably as if they have aligned themselves with the sort of
right team of ascent. And so a lot of that is intuition and it’s luck and it’s
just, you know, staying in there and having that stamina, continuing to stand
up for yourself.
There isn’t a lot that’s given to anyone on Wall Street and whether
you’re a woman or a man, the idea of standing up for yourself and continuing to
be fighting in your own, sort of, behalf, is much more a part of it. And also
asking for the same kinds of things that the people who become more powerful on
Wall Street ask for. They ask for bigger positions and they ask for bigger
bonuses and they demand a lot of what they ultimately get.
7.
Are there any differences in how men and
women get ahead in the financial world?
8.
Well, numerically it’s not necessarily a
level playing field. Certainly the CEO’s in Wall Street today are all men and
they have been all men. So there is a defining process by which at the top of a
firm, there’s far more men in management positions than women. Usually it’s
about fifty/fifty in terms of who goes into the firm, in terms of junior
analysts that are hired into the analyst programs on Wall Street, whether they
come from MBA programs or from other different types of degrees, it starts
fifty/fity and as it sort of goes up the chain, it tends to weed out. When I was
at Goldman as a managing director there, I think less than ten percent of the
managing directors were women, and the number was between nine and twelve
percent, sort of depending on the year, but that was really what happened as
you sort of got up the firm. And certainly management, even senior more
management positions than that, it’s even fewer. So to a lot of extent, there
is a certain way you need to fight throughout a firm in general, whether you
are a man or a woman and it does require a lot of continued focus and energy to
really go up the chain. And plus, the fact that there are more men in
management, I mean, they tend to choose men, because they’re like each other,
to rise with them, and so what happens is it’s kind of a bit of a self-fulfilling
situation. There’s more men in positions of power, they choose men who they
understand and are like and hang out with in certain ways that women don’t hang
out with them and don’t connect with them. And so they choose sort of their
likenesses to come out. It’s sort of like a god-like thing, if it’s a likeness
that comes up through the firm, and that tends to be, and it has been more men
than women.
9.
What happens to men when
they become powerful?
10.
I think men in power
tend to be associated with each other, for the most part. And so this idea of a
big, swinging dick, as Michael Lewis would say, is a
sort of swagger mentality, this fight, this “I’m going to achieve,” and it
tends to be very militaristic as well. It’s competition, it’s a war, it’s being a
warrior, it’s all these other types of metaphors for what happens within a,
particularly a Wall Street firm, in terms of a lot of corporate America, but
particularly on Wall Street, because that’s where the stakes are so much
higher. There’s more money involved and therefore, there’s more power
and therefore, there’s more fight. And that tends to be considered more of a
masculine thing. Whereas a woman fighting doesn’t sort of have that same
historically warrior type of quality in general and so it doesn’t really give
women the same kind of a label that it would give men. Being a bitch might be
something that a woman who is fighting a lot internally might receive, but it’s
not the same thing as a man moving up the ranks and sort of being considered,
you know, that warrior or that swagger, that power player.
11.
Do you feel that this attitude has led us toward
the financial crisis?
12.
Well, it’s like kids in a playground, it’s sort
of like there’s these, there’s sort of a bully mentality, which is that, except
it manifests itself in money and in power and in lack of rules and lack of
regulations that enable a particular bank or a particular type of trading to be
really profitable and sort of propel up the people that are in charge of those
parts of the bank and those parts of the profit up the food chain. And even
into the financial world heads and then also into Washington, where a number of
power players from Wall Street have found themselves. Henry
Paulson, for example, our former treasury secretary, was a CEO at Goldman
Sachs. Robert Ruben, who was the treasury secretary under President Bill
Clinton was a CEO, or post CEO at Goldman Sachs. So it’s this idea of sort of
moving up and moving out and continuing to sort of get power that’s really a
part of the entire process of Wall Street and towards Washington.
13.
Do you think that banks should be split up?
14.
I think splitting the banks up is the only thing that really
makes sense. Right now, the wake of the crises has created bigger, more
powerful institutions than we had going in. So this idea of too big to fail has
become actually created and abetted as well by the government. Last year when
the crises was happening, it was, the federal reserve was in a position to, for
example, deny mergers, to deny banks becoming even bigger than they were when
they were flirting with failure, and instead, what the fed did was prop them up
by guaranteeing a lot of the potential losses that could come from new mergers.
So, for example, Bank of America merged with Merrill Lynch to become the biggest,
most complex institution in the country. As well as one that holds a tremendous
amount of consumer deposits. Wells Fargo and Wachovia also merged to become a
much larger institution with a lot of credit problems of its own. JP Morgan
Chase was given with a lot of government banking, the Bear Stearns Company, an
investment bank which has a lot of risk attached to it, as well as Washington
Mutual. So you have the top three banks in the country even bigger and more
powerful and owning more of consumer deposits and assets than even before the
crises. And that’s the completely wrong thing to do. The only way you can
really regulate effectively and back risk, if it gets out of control, and help
it from spilling over into the general economy, is to make things more
manageable and smaller and regulatable to begin with. And that would entail
splitting up the banks into consumer banks that deal with deposits and loans
and checking and savings and basic funds, and investment banks that can trade
and speculate and do whatever they want, with more regulations so it doesn’t
spill into the rest of the economy, but not with the right to have government
backing when they fail.
15.
Why is closing a deal
thrilling for some people?
16.
I think the thrill or joy has some sort of a
connection to just the idea of accomplishing something that is set out to do
and on Wall Street, that happens to be a big trade or a big deal. It could be
creating a beautiful painting if you’re an artist or a lovely ceramic if you’re
that kind of an artist, or you’re a sculptor. And on
Wall Street, the measure of sort of accomplishment and achievement, aside from
the bonus and the money that is attached to it, is all those little
transactions that happen along the way. And so there’s a real connection of talking
to a client, discussing a particular trade or a particular type of transaction
that they should do, going back and forth on meetings, going back and forth on
phone calls, going back and forth on numbers, and then like coming out of that
with achieving this goal of closing that deal because there’s also a lot of
competition. So when one team from one company is trying to, like a
Morgan Stanley or a Goldman Sachs or a JP Morgan is talking to a corporation,
say a Coca Cola or an Alcoa or whatever, everyone is competing. It’s not like
Goldman is the only company talking to, say, Coca Cola or whatever, on any
given day. There’s a lot of teams and there’s a lot of competition. So what
comes out of that for people involved is the idea of having somehow accomplished
the deal and sort of beaten out the competition. So it’s all very, that’s why
it’s such a very hyper competitive environment. And some people really continue
to get a thrill out of that forever, throughout their full career and stay for
a long time and go up the high chain and keep going, and some people then, and
I was one of them, think that’s, you know, also quite empty because you’re not
actually creating anything. You’re accomplishing a close of a deal, perhaps,
but you’re not actually creating anything real or contributing anything real
and there’s a real emptiness to that. So it goes both ways depending on,
really, I think the person.
17.
Is the recession over?
18.
The recession is
over for the banks at the top of the food chain. The banks that have received
the most government capital and cheap loans from the fed and various forms of
subsidies and now control more of the market so also have more power going
forward as to how things will generally unfold, are doing quite well. Most of
them, Citigroup being an exception, and I think Bank of America will continue
to have problems with its merger with Merrill because it still, I don’t think,
understands what’s going on there. But I think that’s going to continue to be
the situation on that side and it will look like profits are coming and then
bonuses are back, they’re back to 2007 levels, pre-crises levels, for 2009, and
no one seems to have a problem with this. The bankers are quite happy. But in
terms of recovery for the rest of the nation, that’s just not the case. The
rest of the nation is dealing with almost double digit employment on average,
and certainly over double digit employment throughout most of the metropolises
in the country, which is a big difference from even last year, before the
crises, 15 of the top metropolis areas in the United States had double digit
employment, now it’s 139. So there’s been a tremendous increase in joblessness
and therefore financial insecurity for the rest of the country. So we’re not in
a recovery. The banks that are receiving capital are in a recovery.
19.
The Myth Behind the Bailout
20.
The idea of the bail out was to provide the
financial system some sort of a comfort so it wouldn’t create a long term
catastrophe. And the myth behind the bail out that I talk about in the book is
that this would somehow, by giving the banking system capital, by giving them
cheap loans, by flushing them with funds that they wouldn’t otherwise be able
to get in a crises situation and had lost, to a large extent, in a crises
situation, that would somehow release credit for the rest of the population and
it would give individuals more access to money themselves, or help individuals
at the bottom level of the population. But the way it was structured, there was
no way that could’ve happened. Because if you have people at the bottom of
this, I call it an upside down pyramid of risk and assets, where just a tiny
part of that pyramid, the bottom point, are real loans, whether they’re
sub-prime loans or other kinds of mortgages, they’re real and people are either
making payments to them or unable to make payments. But it’s the banking system
that created all of the other debt and securities on top and that’s the part
that failed. Had we helped the individuals by putting capital into their
mortgages, using their homes as collateral, as opposed to all the assets that
were created as collateral to save the federal reserve or to other funds that
were given to the banks through the bail out, that would’ve done two things. It
would’ve helped people stay in their homes. It would’ve helped turn back the
wave of foreclosures that has increased since the bail out happened, it has not
decreased. It would help people not default, it would help them not be
delinquent. It would help the base of the economy. And so the reason the bail
out was wrong, was because instead of focusing on individuals in that way,
which would have been more moral and more economically efficient, it was
focused on giving money to the top level of banks, to help them subsidize all
the risks and securities they created, and that didn’t make its way down and
hasn’t made its way down to the general population. What it has done, is helped
the banks produce record to near record profits a year after the crises, but
anyone would be positioning new profits on the back of a whole lot of cheap
money given to them. So that really isn’t saying that things are terribly
fixed.
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