I’ve intended to write something along the lines of why the banks were so tone deaf that they missed the furor over their bonus payment plans. It’s seemed as if they’ve been out to pick a fight, when all they probably needed to do was lay low this year and then get back to enriching themselves as usual thereafter.
Fortunately, The Epicurean Dealmaker utilizing his inside knowledge of the banking business has saved me the work by neatly describing the mindset of the typical banker:
Let there be no mistake: Mr. Dimon, Mr. Mack, and Mr. Blankfein are not stupid or uninformed. (The jury is still out on What’s-his-name.) They are damn smart; scary smart, in fact. You don’t get to the top of the greasy ladder of a major global investment bank’s executive suite by being dull, incurious, or lethargic. People like that get sliced to ribbons and thrown into the chum bucket in my industry before they reach Managing Director, if they ever get inside in the first place. These guys got game, people. Serious game. You would be foolish to doubt it.
But they also have absolutely no interest whatsoever in the whys and wherefores of the financial crisis, the proper size and role of banks and investment banks in the domestic economy, or the moral imperatives inherent in stewarding the financial plumbing undergirding the daily lives and livelihoods of six billion people. For one thing, they don’t have time to worry about such things. Most of a senior bank executive’s time is consumed competing against other scary-smart investment bankers and executives at other firms, who are hell-bent on grinding his bones into dust beneath their bloody heels, while trying to prevent his own firm from flying apart under the internal stresses generated by thousands of egotistical prima donnas all scrapping for more than their fair share of the pie. There is too much going on, and unrelenting change comes too fast and furious to allow quiet contemplation of the order of things.
Most thoughtful people would agree: it’s not wise to try to classify boreal flora and fauna when you have a tiger by the tail, much less think about how you would like to turn the forest into a time share resort.
For another thing—and because the volatile, high velocity nature of the business attracts such people—the people who go into the industry are not really interested in thinking deeply about why things are the way they are. You will almost never find an investment banker “sicklied o’er with the pale cast of thought.” It’s just not in their genetic makeup to be reflective, introspective, or speculative in an intellectual sense. Investment bankers have almost no interest in why things are the way they are. Rather, they spend all their considerable intellectual and psychological resources on understanding how they can take advantage of the way things are.
So there you have it from one of their own. They just didn’t have time to think about how paying exorbitant amounts of money to themselves that they earned from a game the government rigged for them, after the government bailed them out would play out. They weren’t stupid or foolish, just preoccupied with making money. As TED says, that is what they’re all about.
So yes, Mr. Krugman, you are basically right. Don’t look to investment bankers for answers on how we got here. We don’t know and we don’t care. We take the world as we find it and try to make money.