Email shows the Wall Street arrogance

Filed in archive Ethics on May 1, 2010

With the news that Goldman Sachs is facing criminal investigation, it is worth looking at how this particular case captures the arrogance of US banks that created the financial crisis.

The potential crime: Goldman Sachs had a conflict of interest. The investors were going long, expecting the collateralized debt obligation (CDO) to rise in value, but the hedge fund Paulson & Co and Goldman Sachs made mega profits shorting it. Goldman Sachs and the hedge fund needed investors to believe the security would make profits but chose an investment they knew would fail

Goldman Sachs was so arrogant that it ignored this conflict. And that arrogance is not unique to Goldman Sachs. Check for example this report from the Financial Times Alphaville section which obtained an email that had flying around Wall Street. The email captures the arrogance of the Wall Street culture, not to mention a bit of class war.

"We are Wall Street. It's our job to make money. Whether it's a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn't matter. We would trade baseball cards if it were profitable. I didn't hear America complaining when the market was roaring to 14,000 and everyone's 401k doubled every 3 years … Well now the market crapped out, & even though it has come back somewhat, the government and the average Joes are still looking for a scapegoat. God knows there has to be one for everything. Well, here we are. Go ahead and continue to take us down, but you're only going to hurt yourselves. What's going to happen when we can't find jobs on the Street anymore? Guess what: We're going to take yours. We get up at 5am & work till 10pm or later. We're used to not getting up to pee when we have a position. We don't take an hour or more for a lunch break. We don't demand a union. We don't retire at 50 with a pension. We eat what we kill, and when the only thing left to eat is on your dinner plates, we'll eat that … the Obama administration and the Democratic National Committee might get their way and knock us off the top of the pyramid, but it's really going to hurt like hell for them when our fat a**es land directly on the middle class of America and knock them to the bottom. We aren't dinosaurs. We are smarter and more vicious than that, and we are going to survive."

It's an email that sums up the Wall Street culture: we are smarter than everyone else and we can handle it ourselves. What Goldman did is what we all do. It's just that the rest of the world doesn't understand that.