Tuesday, April 27, 2010


This morning we had the interesting spectacle of Senator Carl Levin asking questions of a Goldman Sachs executive and getting a bit testy because the man was not answering his questions. The fact is, the two were on different planets, if not in different universes. It would have been funny, were it not so dreadfully revealing of the culture we have created.

The questions--really only one of them, repeated in different forms at least a half dozen times--seemed clear enough: Goldman Sachs, if I have this right, was asked by a client how they managed to feel comfortable with a financial arrangement that was evidently going to turn out badly. They felt comfortable, it appears, because they had a financial interest in the deal going sour--and yet they did not share this information with the inquiring client. Did they not, the senator kept asking, have an obligation to acknowledge what their interest was? After hearing numerous explanations of the issue rather than an answer to his question, the senator gave up, concluding that the executive was simply refusing to respond.

I saw it a little differently--not that the guy was refusing to answer the question, but rather that the question itself came from some other universe than the one that he naturally inhabits. The question came from the sphere of ethics. Truly disturbing was that it ran right past this undoubtedly smart, undoubtedly well-informed, perhaps even well-intentioned businessman, whose head was firmly planted in the world of business. He wanted to give a business answer to an ethical question, and simply could not see that in doing so he was missing the whole point of the question.

I was talking only a little later to a man who for many years has guided our own financial decisions, and who is well-versed in the world of finance. Without, he said, wanting to defend Goldman Sachs, he saw the issue differently. Essentially, as he saw it, GS was in this instance no more than an intermediary in a business deal, with obligations to both parties--the party that wanted to sell the "product" and the party that was willing to buy it. The product was essentially a bet between willing parties, and each side was responsible for acquiring the information needed to make their bet a sound one. The client, my friend argued, in this case, was not your aging grandmother, but a player who should accept responsibility for his own mistakes. (As I understand it--and I admit my understanding is extremely limited--GS was not only the intermediary, but also the creator and seller of the "product.")

My friend further argued, in the same vein, that in the mortgage crisis there were no innocents, that those who took out loans they could not afford were as guilty as those who let them have the money; and that the rot of greed pervaded the system, top to bottom. Okay, I hear that argument. But venality at low end of the financial markets does not excuse the even greater venality at the high end. And what's truly disturbing is not just that venality exists--I'd be surprised, really, if it didn't--but that there are so many in our society, like the executive under questioning from Senator Levin, who simply can't see or recognize it as venality. This was the man who insisted, high-mindedly and with apparent sincerity, in his opening statement, on his personal integrity and that of the firm for which he worked.

The tragedy is that we have created an alternate universe, in which we live our lives and pursue our interests in denial of truths that used to be self-evident. We have come a long way indeed since that "Wonderful Life." We used to be able to believe that the world of business and the world of ethics coincided, in most important respects. Now, though, it seems they have shifted to different, non-communicating universes.


Anonymous said...

O.K., Peter, gotta' ask. Huh, what? Suspense is killing me. Betzy

PeterAtLarge said...

See, now you know! (I slipped up, posting the title before I wrote the piece.)

John Torcello said...

All well said, Peter...thanks.

C. H. said...

I couldn't agree with you more, Peter. I watched the inquisition today and, as you implied, the inquisitors were clearly not in touch with the wall Street culture. It's a widely held belief by us commoners that, to make a good deal, two conditions should exist. Nobody in the deal should be under pressure to buy or sell and everybody involved should be aware of all relevant facts. Wall Street doesn't play that way. Disclosure is not part of their game. It is a game to them, a confidence game of perceived credibility. The only scorecard is money. Ethics is not part of the street's process. They don't get paid for ethics. Unfortunately, they win and a lot of other people lose. There are only bonuses, no penalties.

TaraDharma said...

I suppose, ultimately, the borrowers were just as guilty, but I have much more compassion for someone who is making a stretch to buy their first home than i do for players on Wall St. We are so conditioned in this country to own a home (and many other things) and there are multiple industries out there pushing home ownership.

Different languages, indeed. I hope that govt. regulation can create a set of rules that everyone can understand. Wall St. games ruined a lot of people's lives.

CHI SPHERE said...


An area with defensive walls erected by the Dutch to keep the English out during the 17th Century at the southern most ti[p of Manhattan during their war with each other.

Now the walls keep reason out and greed in the place where speculation is the name of the game so why be astonished it's corrupted?

My money is invested in my children's education and art where I can watch both grow with love and kindness.

CHI SPHERE said...

We really don't own anything in this world. The idea of ownership must have come when early humankind needed hierarchy so that labor could be distributed and decisions could be simplified by leadership.

I am a leader for I'm a father so leading is my job. My boys are experiencing the economic struggle in ways never possible before because of the www net. They ask why the world is corrupt and there are so many greedy people that we trust?

I am a father who is learning to listen very carefully!

Listening to my heart and soul during this time of the great leveling of the species throughout our very tiny planet is a good thing to do. Compared to Antares, which is 700 times larger that our Sun, we are a speck of sand.

It's a bit daunting to be a speck but there are a multitude of atoms in a speck of sand.

"IT'S ONLY CASTLES BURNING" I don't live in or near a castle so the fire will only cloud the skies till they are gone from view. I prefer a very large tree to sit under.

Good idea Siddhartha!

robin andrea said...

You said it, peter. It's exactly how I see the players as well. GS is not an innocent bystander in this mess, but the orchestrator of it. I think they may have not known that it would crumble and burn as quickly as it did, but that does not excuse their venality. They need to be held accountable, and we need strong and smart regulations. Since when did banks become gambling casinos?

Olivia said...

Yes, yes, yes...I couldn't agree with you more. Integrity seems to be a foreign concept to the CEOs, politicians, and lawyers of our culture. Greed can justify itself, at all costs. I do love the title... so many things in the news leave me with that feeling, huh?

Anonymous said...

Well worth the wait! I love your insight into what is going on in our world. It seems that the main thing now is that we who care somehow maintain our own little space of ethical living in our lives. It is clear that no one else out there is going to do it for us!
Thanks Peter, Betzy

PeterAtLarge said...

Thanks for the comments, all. I think this is something we can pretty much agree on!