Going Native in the World of Finance

September 22, 2011 10:04 AM

The Guardian has launched what they term "Bankers: An Anthropological Study." One of their first discoveries? People really hate bankers. Daniel Davies - Left of Center Finance Guy, Twitterer, and Crooked Timber Blogger attempts a defense. "But who's the real criminal? Its me, isn't it?"
posted by JPD (35 comments total)

Bad, stupid products[2] like Option ARMS or subprime buy-to-let teaser mortgages, were not invented by the industry out of sheer cackling evil; they were invented because they were the only way to get the people into the houses, given how expensive property had become.

HA HA HA HA HA HAHAHAHA HA HAHAH AHAHAHAH AHAHHAHAHA HAHAH

TS;DR
posted by spicynuts at 10:10 AM on September 22, 2011 [13 favorites]

...and perhaps have a look at this LOL clip about the financial world:

Wow, I can almost see him throwing up his hands and saying "fuck it, I'll make it an adjective" w/r/t the placement of that LOL.
posted by griphus at 10:13 AM on September 22, 2011

So my basic message here is that economics isn’t a morality play, even in the face of a depression. Even morality isn’t a morality play, most of the time. I wasn’t actually responsible for the housing crash and nor were most of my mates. We didn’t close down your local library or put your student fees up; that was the coalition government who did that. In general, if you want to build a better society, the message from the more thinking and socially responsible element of the financial sector is “send us the bill and spare us the lecture”.

I think my definition of "socially responsible" is his definition of "morality play."

Davies thinks banker-blaming makes for a poor politics, and that's probably fair enough if that's all we have; but isn't it even harder to build an egalitarian politics on the buck-passing banal amorality of a defense that seems to amount to "the system did it, not me, I'm a socially responsible guy working within the system"? Sure, we ultimately want regulation rather than blame, but (a) blame can be a powerful political force and (b) this is a very weak and narcissistically aggrieved form of exculpation.
posted by RogerB at 10:22 AM on September 22, 2011 [6 favorites]

I think maybe some of the bankers were also taken for a ride along with the rest of us, but it seems fairly clear now that it was the demand for high-yield investment vehicles (for all those billionaires who found themselves with too much surplus capital due to the increasing income inequality gap created by the post-Reagan tax breaks for the wealthy and other regulatory reforms) that really drove the issuance of all that spectacularly bad debt.

Probably that's why Bush was so gung-ho about the ownership society (not that Clinton didn't play along, too, to a lesser extent). He (or his handlers) knew investors were desperately looking for somewhere to park their new surpluses, and they were going to create the debt to meet the demand one way or another. That's also probably why Bush's brother Jeb in Florida deregulated Florida's loan industry and created an entirely new class of unlicensed loan originators (who ended up committing fraud like crazy). Getting more people into homes was just the political pretext. They were really just trying to meet all that demand for high-yield investments.
posted by saulgoodman at 10:31 AM on September 22, 2011 [8 favorites]

Left of Center Finance Guy

Oxymoron?
posted by adamdschneider at 10:32 AM on September 22, 2011

If that last bit turned out to be correct, would that be some kind of fraud?
posted by saulgoodman at 10:32 AM on September 22, 2011

Left of Center Finance Guy

I believe Mutant would qualify.
posted by saulgoodman at 10:34 AM on September 22, 2011 [3 favorites]

They were really just trying to meet all that demand for high-yield investments.


(Really its more like slightly higher-yielding safe investments)
posted by JPD at 10:35 AM on September 22, 2011 [1 favorite]

...Option ARMS or subprime buy-to-let teaser mortgages, were not invented by the industry out of sheer cackling evil; they were invented because they were the only way to get the people into the houses, given how expensive property had become. This was, as Dean Baker keeps reminding us, a housing bubble first and foremost and a financial bubble second; we are in a recession basically because of the disppearance of a huge amount of household sector wealth.

this is incredibly disingenuous.
posted by ennui.bz at 10:38 AM on September 22, 2011 [4 favorites]

Obviously "the only way to get the people into the houses" != "altruistically make the houses affordable for the people." It means "the only way to allow people to continue buying real estate and banks to continue making loans."

You can argue that's still "sheer cackling evil" if you want, but reasonable minds will differ, and it is not disingenuous to point that out.
posted by eugenen at 10:46 AM on September 22, 2011

(Really its more like slightly higher-yielding safe investments)

Or a securities market that hedge funders and other sophisticated traders can hitch their derivatives trading strategies onto after the stock market tanked in 2001...

That whole ct article is full of self-serving thinking:

There’s also an economic version of the same argument. The answer to the question “Hospitals, or bank bailouts?” is “deficit spending, you ass!”. Money for the banking sector bailouts hasn’t come out of the mouths of babes and Sure Start centres; the austerity measures were a specific and separable decision, made by people who ought to be held accountable for it.

So, who supported the Liberal/Tory coalition, surely not bankers? It's really (again) disingenuous to say that austerity is separable from the politics benefiting 'the city.' And in the US, Obama is where he is precisely by trying to make friends with "Left-thinking" finance types.
posted by ennui.bz at 10:48 AM on September 22, 2011

I couldn't get much further than this paragraph in the last link.

"This was, as Dean Baker keeps reminding us, a housing bubble first and foremost and a financial bubble second; we are in a recession basically because of the disppearance of a huge amount of household sector wealth."

The first clause is just flat-out wrong. Though there is a bit of chicken and egg to the situation without the easy mortgage loans, there would have been much, much fewer buyers. Money was pouring into the financial system from outside investors looking for a payday; banks had lots of money to loan and nowhere to loan it; so they created ARMs and pumped the subprime market.

I remember the billboards and TV ads, it's not like this happened a hundred years ago. The banks were pushing loans like crazy. My own goddamned accountant tried to foist an ARM refi on me; that was literally the last time I saw him.

Easy credit was made available to people who should not have been buying. The bubble in the housing market was a direct result of easily accessible loan funds, not the other way around. In fact, if it was the other way around; lots of homes being sold, so people are flocking to the mortgage companies with huge demand, then mortgage interest rates should have been going up, and terms better for the banks. It's basic economics, and it's not what happened.

Everyone knew the loans themselves were risky. They aren't called subprimes because it sounds catchy. The banks weren't worried about the risk because they weren't assuming the risk. They were repackaging the loans and selling them as mortgage backed securities. The secondary market was insuring themselves with CDSs, so those that knew the assets were crap were covered anyway. Again, no risk.

The "disappearance" of household sector wealth is a myth, too. There was no "household sector wealth". The banks were making loans to large swaths of people who had no "household wealth". That's why they were called subprimes, again.

I hate to beat this dead horse, but for God's sake when someone who should know either is an idiot or thinks we are, well, I am gonna dig that fetid festering equine carcass up and pound on it like John Bonham.

On a side note, I'd like to add that the economy isn't going to recover until household consumer debt goes away. That could be more than a decade. Enjoy.
posted by Xoebe at 10:49 AM on September 22, 2011 [14 favorites]

Chris: Alvin, I was just thinking you've got enough vintage steel around here to make a few thousand Toyotas. Ever think of selling the whole place to the Japanese?

J.P.: There you go. Does the Pope wear a hat? Was Sergeant York's mother an angel? And will a banker grope for money?

Chris: I'm not a banker, I'm a financial publisher.

J.P.: Well, all I know is in '17 after they shipped me off to fight, some New York financier rolled into here one day and hog-glowsered and tub-wankled my grandfather into mining out the whole town in exchange for shares in something called the United Coke Company. Do you know what those stock certificates are worth today? JUST ABOUT THE FINEST OUTHOUSE WALLPAPER YOU'VE EVER SEEN! We were forced to become what you drove through today; a burnt out coal field and the biggest icebox graveyard this side of the Ohio foundry belt! And that's why I *never* let a banker go!

Fausto: So your grandpa made a lousy deal, is that our problem?

Diane: Judge, that's a very tragic, tragic story.

J.P.: I believe it is.

Renalda: You should do a book.

Transcript adapted from here.
posted by dhens at 10:53 AM on September 22, 2011

Or a securities market that hedge funders and other sophisticated traders can hitch their derivatives trading strategies onto after the stock market tanked in 2001

the size of the hedge fund and prop desk world is tiny relative to the size of the market for Fannie and Freddie backed RMBS
posted by JPD at 10:54 AM on September 22, 2011 [1 favorite]

that's right--high yield relative to the supposed risk, really

I do kind of agree with this bit, though:

Luyendijk’s qualified defence of bankers against the rage element in the Comment is Free community basically seems to hinge on the fact (which is basically true) that lots of people in the financial industry didn’t really have very much to do with the decisions that led to the current financial crisis.

Not all bankers are created equal. But the industry as a whole--not necessarily the individuals--definitely does deserve a substantial share of the blame (along with whoever may have been actively involved in helping create the bubble knowing full well it couldn't last, which would be the political leaders who architected the whole mess).

Wow. I just can't get over it, now that I've made this connection: Jeb really did know exactly what he was doing, didn't he? At least, as far as creating more debt for those big investors goes. The timing is too perfect. He set all those unlicensed loan originators loose in Florida at exactly the right time to help create the bad debt used in so many of those CDOs. He opened the pipeline to meet that demand, not the demand for housing.
posted by saulgoodman at 10:58 AM on September 22, 2011

Also, the whole "banker hate" line is pure trolling. Most bankers are well paid servants of the very very wealthy (some of whom are also bankers)

So, are the mega-rich evil like Hitler or evil like Ebola? Inquiring minds want to know...

the size of the hedge fund and prop desk world is tiny relative to the size of the market for Fannie and Freddie backed RMBS

I think the argument that the 2007 housing/finance bubble was driven by insatiable demand for risk-free products is kind of beside the point. Bubbles are complex, the point is that everyone who was supposedly responsible was looking at the bubble while it was inflating (for whatever reasons) and saying: how can I make bank on this... instead of freaking out about what the consequences would be when it popped. That's where the culpability lies.
posted by ennui.bz at 10:59 AM on September 22, 2011 [1 favorite]

Water runs downhill, but it usually doesn't lobby someone else to dig a trough for it and set up a pumping station.
posted by benzenedream at 11:04 AM on September 22, 2011 [3 favorites]

Left of center my ass. He's plainly an apologist for the banking industry.
posted by doctor_negative at 11:13 AM on September 22, 2011

I hate to beat this dead horse, but for God's sake when someone who should know either is an idiot or thinks we are, well, I am gonna dig that fetid festering equine carcass up and pound on it like John Bonham.

I believe that's the first time I've ever seen John Bonham's 'talents' invoked online on behalf of a performance both that he was qualified to deliver and that I would enjoy.
 
posted by Herodios at 11:15 AM on September 22, 2011 [1 favorite]

Wealthy financiers, helped by politicians and others who have a moral and fiduciary responsibility to society (in my world, at least) built this house of cards. They are responsible; they should pay. To date, they haven't.

Think about it: several thousand - maybe up to 10,000 or so individuals were directly responsible for building that house. An analyst buddy of mine a few years ago said that if someone took the time they could easily show that as the results of the bubble braking rippled throughout world economies, it cause more real loss of assets than all the loses ever caused by all the thieves who have ever been imprisoned, ever. There no way to put a metric to the deaths and broken families, lost educational opportunities, etc. etc. that these people caused. It's beyond truly accurate analysis, in terms of collective social and fiscal cost. Stunning.

Yet, those at the highest echelons in the financial world and policy-making worlds who brought this about - including some who have advised the past 2-3 POTUS, are walking free, and even on the lecture circuit - making more filthy lucre.

To some degree, we're all culpable, because we let our collective selves get caught up in the belief that we could take a short cut to happiness via material acquisition. That's a story (with a lesson) as old as the hills, but one that seems not able to transmit a permanent lesson. So, we're where we are, and now we have to pick up the pieces.

The thing that continues to nag at me - and when I let myself take sufficient time to mull over, piss me off - is that the real criminals got away, even though we know who they are.
posted by Vibrissae at 11:43 AM on September 22, 2011 [3 favorites]

Left of center my ass. He's plainly an apologist for the banking industry.

This is mildly hilarious to anyone who's followed dsquared for more than the past several hours.
posted by kenko at 11:55 AM on September 22, 2011 [5 favorites]

I mean it's mildly hilarious to anyone who reads the linked piece, or should be, since you can clearly see him advocating explicitly for Keynesian economic policy and implicitly for redistributive taxation.
posted by kenko at 11:59 AM on September 22, 2011 [3 favorites]

Sure, con men typically prey on a certain amount of greed. Doesn't make the con man honest.
posted by Bovine Love at 12:42 PM on September 22, 2011

A friend of mine's a banker. He's not wealthy (he and his wife rent a modest-sized flat on the outskirts of Brighton), and mostly is involved in small deals (he does commercial banking in the southeast of England; finance for small businesses and such). His wife has mentioned on occasion how sick she gets of hearing people slagging off bankers.
posted by acb at 1:04 PM on September 22, 2011

Well, teachers are pretty sick of hearing people slagging off on them, too, but then, their industry isn't too big to fail (lord knows it could use a bailout; schools in the US now spend much of their time and energy on fundraising because they aren't fully funded), so really, who cares about that?
posted by saulgoodman at 1:23 PM on September 22, 2011 [1 favorite]

Schmucks quick to categorize dsquared need to understand that he is responsible for arguably the single greatest blog post ever written (no I won't link - go look, you'll turn it up quickly enough) - and is without question, line to line, easily one of the best and smartest writers in the blogosphere.

By no means an apologist. This latest post disappointed me, but y'all need to know what the fuck you're talking about before psychologizing the man...
posted by waxbanks at 2:34 PM on September 22, 2011

Well, teachers are pretty sick of hearing people slagging off on them, too

One key difference between the banking industry and the teaching industry: while individual teachers and individual bankers no doubt work hard and try to do well at their jobs, bankers tend to actually do more or less what their industry claims to do; teachers tend not to. If teachers actually educated students no one would ever slag them off. They claim to do so; they are not, in fact, paid to do so. That's a rather more complicated situation though.
posted by waxbanks at 2:37 PM on September 22, 2011

Banks are utilities and should be treated as such: allowed to make a modest profit but tightly regulated and carefully watched.
posted by LastOfHisKind at 3:56 PM on September 22, 2011 [2 favorites]

Everyone Loves Burning Banks
posted by homunculus at 4:22 PM on September 22, 2011

You've missed the most interesting part of this story - Daniel Davies is, in fact, John Saul Montoya aka Streetlawyer.
posted by claudius at 4:53 PM on September 22, 2011

Probably that's why Bush was so gung-ho about the ownership society

Bush was gung-ho because he thought that people who own things tend to skew Republican, so creating more people-who-own-things would create more Republicans. Or at least, that's what the AEI was saying.

I suppose with a different president the financial sector might have sold it a different way, like helping out minorities, or needing the money to avoid total economic disaster or whatever.
posted by fleacircus at 4:54 PM on September 22, 2011

Count me in as disappointed with this latest Davies, but vouching for his status as brilliant left-of-center blogger and all-around good egg. The reaction of CT regulars in the comment thread ("Who are you and what have you done with d-squared?", etc) is quite telling. And I think Tom Slee is right that ejh's comments on Davies' post are very good.

Regarding the Guardian column: I am all for a bit of in-depth description of the lives of bankers. Not much sign that the column is "anthropological" in the sense of offering any sort of social analysis or critique, though. And I find it a little frustrating (if unsurprising) that he presents the his application of anthropology to the study of finance as something new. Maybe he could have shone a light on some of the excellent work already out there.

I would have started with Karen Ho's ethnography of Wall Street investment bankers in the late 90s, Liquidated (Google Books, Time interview) and then moved on to some of the names mentioned here who deal not with banking but with finance more generally: Caitlin Zaloom (with her ethnography of pit trading in Chicago and London), Bill Maurer on Islamic banking, Hirokazu Miyazaki and Annelise Riles on Japanese finance workers, and others.

Part of the problem with these writers is how inaccessible they are--paywalled and thick with theory (although I think the books by Ho and Zaloom in particular are very readable and deliberately light on theory)--and this Guardian column could have been a good place to disseminate some of their ideas. This is likely just as much the anthropologists' fault for not doing more to popularize their work, of course, but if Luyendijk were anything like a real anthropologist (or a real academic of any stripe) he would start his "study" with a survey of the existing literature.

(All of this is without even mentioning either sociologists of finance, like the excellent Donald MacKenzie, who has written accessibly about the financial sector for the LRB, or certain other well-known anthropologists-who-later-became-journalists.)
posted by col_pogo at 4:59 PM on September 22, 2011 [3 favorites]

If teachers actually educated students no one would ever slag them off. They claim to do so; they are not, in fact, paid to do so. That's a rather more complicated situation though.

No, teachers are all too busy being fundraisers in the US to teach kids. Seriously. It's not their faults.

In fact, when a company's failing, it's always management's fault--never the whole workforce. Why are teachers any different?

Unlike Bankers--who actually are failing us, considering that, literally their only job is to handle the money we entrust to them carefully and responsibly, and they just keep flushing it down the toilet.

Teachers are not failing to teach: communities, parents, kids and the government are failing teachers and schools, refusing to do their share, and it shows. I've worked in the education field. I have a child in public school. One of the better ones. But even the good ones are not immune to these pressures .

Teachers have to be fundraisers, because our schools aren't fully funded. Funding is often pushed down to the county level, and the counties are broke because the Florida state legislature put a cap on their local millage rates, capping their revenue generation capabilities while at the same time demanding they provide more and more services formerly provided by the state.

This is crap. Teachers deserve better. Bankers do not.
posted by saulgoodman at 9:10 PM on September 22, 2011 [1 favorite]

Cuz it has to be done...

metafilter: dig that fetid festering equine carcass up and pound on it like John Bonham.
posted by symbioid at 10:30 PM on September 22, 2011

Bush was gung-ho because he thought that people who own things tend to skew Republican, so creating more people-who-own-things would create more Republicans. Or at least, that's what the AEI was saying.

I don't think so. That doesn't explain why Jeb deregulated the mortgage origination industry in Florida. There was no great demand at the time for more mortgage lenders--it wasn't as if people weren't able to get into homes because there weren't enough licensed mortgage brokers or banks willing to lend. All the deregulation of loan origination in Florida did was ensure that many of the loans issued in Florida wouldn't meet even minimum lending standards. And sure enough, they didn't. The whole thing just stinks to me. And consider this:

All through the 1980s, when Jeb Bush ran the Bush Realty out of Miami at 1390 Brickell Ave. (before he ran Bush Codina Realty in 1992-1993), he represented himself to clients, banks, insurance companies and mortgage brokers as a licensed realtor. In fact Jeb Bush is not a licensed realtor in the State of Florida nor has he ever been.

His application for a realtor's license in the State of Florida was repeatedly rejected due to "outstanding criminal investigations of his business activities conducted by the Florida Department of Law Enforcement."

posted by saulgoodman at 10:39 AM on September 25, 2011