I would like to repeat some gossip that I once heard about a competitor. This isn’t the kind of thing we normally do at the Financial Times. But in this case, I believe a wider dissemination of hearsay could contribute to the public good.
My source on this story was a spokesman at a big European bank, which means he was somewhat reliable. He told me of a meeting that he helped arrange in New York several years ago to introduce his chief executive to a reporter at another business publication.
The journalist enjoyed a reputation as a veritable dean of our local press corps. But on the appointed day, he seemed more like an absent-minded professor. After he was ushered into the designated room, the reporter committed the cardinal corporate sin of failing to tell the difference between a chief executive and his assembled flak deflectors and coffee fetchers. As a result, our scribe sidled up to the visiting bank boss and asked a simple question.
“What do you do?”
The query did not help the reporter’s reputation in that room; it was, as they say in London, really rather awkward. The chief executive, according to my source, wondered what he was doing talking to such a dim bulb. The PR guy was even more mortified, demonstrating once again how empathetic people can get when you pay them enough.
In thinking about that interview now, I would say it’s possible the journalist wasn’t all there that day. He also might have been playing the fool and giving the foreign banker a “proper” New York welcome (you can colour us unimpressed).
But with the benefit of historical hindsight, I would suggest that the reporter in question, whether he knew what he was doing or not, was a hero, a role model for all of us - journalists, regulators, investors and the like - who are supposed to make sense of the Wall Street world.
What do you do? That’s an essential question, and looking back on the years when I covered a financial beat, I would say I didn’t ask it nearly enough. My sense is the same goes for many of you. It’s just so much easier to nod your head and avoid the embarrassment that can come from using concrete language to question the mighty.
The consequences of our collective failure have been revealed in recent months by the struggle of an army of lawyers, accountants and investigators to untangle the mess at MF Global, a US brokerage that went bust last October after making bad bets on European debt. Some $1.6bn in customer funds remains missing, and investigators are so lost in MF space they have come to speak of the money vanishing – as if anything like that happens in the real world.
The controversy took a more political turn last week. People in Congress went nuts after the bankruptcy trustee for MF Global Holdings indicated that he might seek court permission to pay bonuses to three senior brokerage employees who have been helping recover assets and would be hard to replace with people from outside MF Global.
If only we knew what these people did in the first place! We don’t, really, because that would have involved someone asking a highfalutin character at the company such as Jon Corzine – the former Goldman Sachs head and New Jersey senator and governor who took over MF Global two years ago - a silly question like: What do you do?
Because hardly anyone seems to have done that, the MF trustee has been thinking of giving extra money to people who might have had a hand in creating the mess that they are now trying to clean up.
The logic of this kind of policy is mind-numbing. It’s almost reached the point in finance where some of its least successful practitioners are among its most irreplaceable. Only these people can do the voodoo needed to undo their own doo-doo.
This, I would submit, is one of the reasons that the sophisticates of Wall Street and the City of London turn up their noses or roll their eyes when someone asks them what they do; they don’t want you to know.
The fact is, if you strip away the jargon and the attitude, much of what goes on in the world of high finance isn’t all that complicated. A bonus, for instance, is a payment made in addition to an employee’s regular salary. It would stand to reason that such a payment would be made when times are good and profits are better than expected.
It would also stand to reason that people who lose money shouldn’t get bonuses. The exception comes when people work at places like MF Global. It makes me wonder how they do it.
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