An article in the Wall Street Journal this morning complains about the public scorn of bankers in the world today and blames increasing outrage on the “preaching class hatred to people besotted by the politics of envy”–and specifically as articulated in the 2016 presidential race by democratic candidate, Bernie Sanders. See: Bernie’s Wall Street Slander
As Deputy Editor of a preeminent publication serving the finance establishment, it is not surprising that Bret Stephens would argue this view. Since the 2008 financial crisis of their making, bankers have enjoyed 7 years of extraordinary advantage, privilege and legal immunity worldwide. This has enabled them to funnel public funds into their own coffers and extract some obscene riches for a few at the expense of the many. In doing so, they have left the world more indebted than ever before and dangerously depleted and exposed coming into the next global recession.
Mr. Stephens points out that financial services employs some six million people in America, 900,000 in the securities and investment end of the business, and asks:
“Is Mr. Sanders suggesting that some large proportion of those 900,000 is in on the fraud; that every man among them is a Madoff?…Those are questions that ought to be put to Mr. Sanders, and ones his supporters might also want to ask themselves.”
I beg to differ. It is not up to the public to determine good from bad actors in finance, it is up to people working in finance to distinguish themselves. I speak from experience.
I began my career on the sell side of a major bank owned securities dealer in the 1990’s. Once I realized (within 2 years) how harmful the business model was to the world, I did not close my eyes and continue. I did not keep taking easy money. I did not fight regulators for the right to continue a trust-abusing job. I did not decide to double-down on misleading advertising in order to attract a fresh crop of confused victims to feed on each market cycle.
My partner and I worked hard and devised a new business model. We quit our jobs to found an independent, buy side, fiduciary investment counsel firm mandated to serve only the best interests of our clients. We gave up income to do so. We used up our savings to start. We gave to get and gradually built self-respect and a valuable client service in the process.
Although many people in finance and other businesses hide their personal choices and deeds behind the facade of a corporation, the truth is we all must be accountable for how we chose to make money. We are in the end, what we aid and abet through our personal acts and omissions.
Of course not everyone working in finance means to commit fraud or cause harm. But the reality is that willful blindness is also a culpable mindset and the vast majority are working in models that do not put the best interests of their clients first. This is as indefensible in finance as it is in medicine, law and other advising professions. If individual actors do not chose to be part of a solution then they are the problem.
In finance as in all things, we must acknowledge the timeless truth: “All that must happen for ‘evil’ to prevail, is for ‘good’ people to do nothing.”