Over the weekend watched a movie, “Inside Job“. A movie that tracks the collapse of the Wall Street in 2008 which caused the worldwide recession from which the world is yet to recover. It tracks and interviews many of those responsible for the financial crash. Many financial behemoths like Bear Stearns, Lehman Brothers collapsed. Many were taken over by other financial firms like Merrill Lynch bought over by Bank of America, Wachovia by Wells Fargo, Bear Stearns by JP Morgan etc.
The whole collapse was fueled by the excesses of the financial institutions and the professionals who were a part of them. Technology ensured that that complex financial products like CDOs were sold to institutions, retail investors. People with no jobs were given loans to buy property, excessive salaries for brokers, heads of major financial companies only made them greedier leading to more and more desperation in inflating sales so that they could take a bigger and fatter pay packet at the end of the month.
Prostitution, fake bills, consuming cocaine and other forms of drugs, splurging on luxury goods, bay-front properties, casinos etc was the order of the day for the bankers, brokers employed in these institutions on Wall Street.
According to this list provided by the Federal Deposit Insurance Corporation, more than 370 banks have closed down since the beginning of 2008. An estimated $14 trillion was lost because of the crisis. And that is just a lower estimate. The true cost of the whole crisis might never be known. Millions of jobs lost, tens of millions of people pushed back into poverty.
All those responsible for the crime were never brought to justice, nor will they ever be. Some of the ones who violently opposed any form regulation of the financial industry which was the basic cause of this financial crisis are now sitting comfortably in the seats of power. They are today part of the government. Alan Greenspan, Ben Bernanke, Timothy Geithner; everyone contributed their part to the crisis not to mention Dick Fuld (Lehman Brothers), Angelo Mozelo (Countrywide Finance), Hank Paulson (Goldman Sachs & Treasury Secretary in 2006), George Bush, Bill Clinton etc were in some way or the other responsible for the mess we find the world in.
During the boom years of the 2000s, there were lots of people hectoring the Reserve Bank of India (RBI) for taking a conservative stance and blaming the RBI for not opening up the financial markets to the so-called reform that the US was doing. Its that same conservatism that shielded India and its banks from getting smashed up by the tsunami created in the US and world financial markets.
For years, the Wall Street had been my dream place to work. I loved the whole idea of minting money the way the bankers made. From the late 90s till the collapse in 2008, i had a rosy idea of these places. In fact, my dream job would have been working with Lehman Brothers, Merrill Lynch etc. As i kept reading about the collapse in 2008 and the circumstances that lead to it, it not only crumbled my dreams but also made me think if i could have handled such a life of debauchery & lies that were commonplace in this industry.
Would i be able to mis-sell a product to a retail investor and then go home and sleep peacefully? The movie raises a lot of questions about morality and your job. For every parent who wanted their kids to join the financial industry and make tons of money, this movie is an eye opener. Money is there in abundance, but what we need to realise is if there is the moral compass that can guide us when the excess money flows in.
Are you an investor in real estate, stocks, bonds, mutual funds etc? Are you planning to make a career in the financial industry? Do you know someone who works there? This movie is a must watch and the book “The end of Wall Street” is a must read. Roger Lowenstein writes a blow by blow account of the last few days of the collapse of the Wall Street. Its a riveting read.
And yes, if this doesn’t outrage you, nothing will. Because in the world of finance, there is something called TBTF (Too Big to Fail). Just become big by hook or by crook and then the government will ensure that you will never fail. They will always bail you out no matter how big an asshole you have been.
“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” – J Paul Getty