Wall Street feels no shame
I'm not so sure Iowa's Sen. Charles Grassley ought to have backtracked after saying AIG executives should disembowel themselves.
Amid the frenzy of politicians scurrying to get on the right side of the current outrage over $165 million in bonuses being paid to the financial whiz kids who helped bring insurance giant AIG -- and the U.S. economy -- to its knees, Grassley's comment was as sensible as any. He noted that, in Japanese tradition, a samurai -- or, more recently, a business exec' -- who brought shame on himself would commit seppuku, a ritual in which the mortified individual plunges a very sharp blade into his gut and slices away. The senator suggested the highly-compensated AIG employees should return their bonuses or submit to the knife. Of course, there is one flaw in Grassley's idea: it assumes that any of these guys have the capacity for feeling shame.
I seriously doubt that is the case. I suspect that, right now, rather than shame, the AIG employees are feeling persecuted by New York Attorney General Andrew Cuomo who wants to publicize their names. Holed up in their Long Island mansions, they are probably wallowing in self pity as they watch the news from Congress where bills are being written that would tax away their bonus money. Any shame genes were drummed out of these folks years ago in business schools where teaching ethics has gone the way of teaching Latin. Shame did not enter into the equation either as these financial hot shots concocted the credit default swaps built on bad mortgages that made them rich while setting their country up for a steep fall.
The workings of credit default swaps, derivatives and other exotic financial instruments are so convoluted and hard to understand -- even for the brainiest people on Wall Street -- that I won't even try to explain them. Suffice it to say that one of the rare honest souls in the world of investment, Warren Buffett, years ago called them "financial weapons of mass destruction." The guys who made money off of these FWMD's, like the AIG team, are akin to the medieval charlatans who claimed they could magically turn lead into gold. The only way to really make lead into gold, of course, is to apply gold paint to the lead and sell it to someone foolish enough to pay you for it. That's essentially what the AIG bonus boys did; they bundled a pile of bad mortgages, made it look pretty and sold it as something that had value. The difference between what they and all their compatriots in the derivatives business did and what Bernie Madoff did with his Ponzi scheme is only a matter of slim legalities.
And so, it is right for us all to be angry with them. I am not quite convinced, however, that it is right that politicians in Washington should be indulging themselves in such righteous indignation. A lot of them allowed -- even encouraged -- the lax regulation that let the gambling spirit prevail in our financial markets and in the mortgage lending business. As they scramble to get in front of microphones and TV cameras to express their outrage, maybe they, too, should be feeling just a wee bit of shame for doing nothing while the pirates of Wall Street carried off their plunder and set fire to American dreams.
I'm not so sure Iowa's Sen. Charles Grassley ought to have backtracked after saying AIG executives should disembowel themselves.
Amid the frenzy of politicians scurrying to get on the right side of the current outrage over $165 million in bonuses being paid to the financial whiz kids who helped bring insurance giant AIG -- and the U.S. economy -- to its knees, Grassley's comment was as sensible as any. He noted that, in Japanese tradition, a samurai -- or, more recently, a business exec' -- who brought shame on himself would commit seppuku, a ritual in which the mortified individual plunges a very sharp blade into his gut and slices away. The senator suggested the highly-compensated AIG employees should return their bonuses or submit to the knife. Of course, there is one flaw in Grassley's idea: it assumes that any of these guys have the capacity for feeling shame.
I seriously doubt that is the case. I suspect that, right now, rather than shame, the AIG employees are feeling persecuted by New York Attorney General Andrew Cuomo who wants to publicize their names. Holed up in their Long Island mansions, they are probably wallowing in self pity as they watch the news from Congress where bills are being written that would tax away their bonus money. Any shame genes were drummed out of these folks years ago in business schools where teaching ethics has gone the way of teaching Latin. Shame did not enter into the equation either as these financial hot shots concocted the credit default swaps built on bad mortgages that made them rich while setting their country up for a steep fall.
The workings of credit default swaps, derivatives and other exotic financial instruments are so convoluted and hard to understand -- even for the brainiest people on Wall Street -- that I won't even try to explain them. Suffice it to say that one of the rare honest souls in the world of investment, Warren Buffett, years ago called them "financial weapons of mass destruction." The guys who made money off of these FWMD's, like the AIG team, are akin to the medieval charlatans who claimed they could magically turn lead into gold. The only way to really make lead into gold, of course, is to apply gold paint to the lead and sell it to someone foolish enough to pay you for it. That's essentially what the AIG bonus boys did; they bundled a pile of bad mortgages, made it look pretty and sold it as something that had value. The difference between what they and all their compatriots in the derivatives business did and what Bernie Madoff did with his Ponzi scheme is only a matter of slim legalities.
And so, it is right for us all to be angry with them. I am not quite convinced, however, that it is right that politicians in Washington should be indulging themselves in such righteous indignation. A lot of them allowed -- even encouraged -- the lax regulation that let the gambling spirit prevail in our financial markets and in the mortgage lending business. As they scramble to get in front of microphones and TV cameras to express their outrage, maybe they, too, should be feeling just a wee bit of shame for doing nothing while the pirates of Wall Street carried off their plunder and set fire to American dreams.
