Mark recently posted an essay speaking to the notion that it is incompetence which makes banking a reviled profession, much more so than any moral failings on the part of its participants.
“What makes banking truly disreputable is not that some of its practitioners have moral failings, but that large numbers of its practitioners are inept: mediocrity, not malevolence, is the dirty secret of the sector.”
I wholeheartedly agree with him, although his digression in his article, in which he mused about the relationship between people who are moral and people who are competent – which he wrote as an aside – was, I think, actually the core of the essay. Having been a banker now for just shy of 25 years – it’s funny to think that Mark met me just a few years into my career – what he wrote in that aside struck a painful chord. What I have found is that banking seems to attract the worst people: those who are fully, truly inept, not just at banking, but at life itself. The problem is that very, very few people understand and appreciate what banking is, but – to quote a famous bank robber – banks are where the money is. It’s actually not true; banks are not, in fact where the money “is”, it’s just a kind of transit station that all money has to pass through at some point. But because all money does have to pass through banks, banks get to “see” all the money, and morally inept people see that and think “gosh, if only I could skim a bit from the top”. And not just morally inept people: clever morally inept people.
An old friend of mine once said the worst insult she could give to a person was to say that they meant well, that they had a good heart: the implication of course being that while they meant well, they were functionally too stupid to do anything useful about it. I’m actually of a different vein: give me a transparently dim but good hearted person any day over a clever person without morals. I’ve met many such people – heck, I’ve dated a few, because I’m a little too optimistic about what’s inside people’s hearts most of the time – and they are the real devils. If I say you’re clever, then you know I think you’re evil, and you have been warned.
The thing about clever people, though, is that the modestly clever people are caught out by complexity. Indeed, that’s where banking regulation has historically played a good and fine role: banks deal with the most complex human problem that we’ve created for ourselves, the dynamic expression of social value embodied in the exchanges we make amongst ourselves for goods, services, information, and labour, and while modestly clever people can invent things (CLOs, CDOs, CDO squareds, flavours of ETFs, alternative Tier I capital, contingent capital instruments – you get the picture), eventually the complexity of the system and the tendency of highly complex systems to generate completely random and unforeseen outcomes quickly means that modestly clever people blow up eventually. This has been my experience, at Washington Mutual, at the British global megabank that should have failed but didn’t because they paid the Qataris to bail them out, at the asset manager that Mark and I both worked for. The market – money – is too complex to allow the modestly clever to last for long.
The really evil ones, though – the truly clever – on some level know that the system will catch them out. They live in fear of that moment of chaos which will catch them. Some of them check out of banking, realizing that it is a game that they will eventually lose; most of those, though, are attracted to other shiny objects than simple wealth or power. They like drugs more, say, or sex, or they realize they can play other, simpler games (like art or charity or real estate) and they won’t face the same risk of losing. I don’t mind those so much; given that I’m not interested in other, simpler games, they can go do what they like. As a manager in banking, I’ve spent countless hours of coaching and mentoring such truly clever people to get them out of the building, away from the complex, dynamic, and accelerating machine that is the money system, that teaches humanity what value means to itself. Eliminating their corruption is a good thing; when I’m in senior enough roles, I can do a lot of good by doing so.
But enough of the truly clever – not incompetent, as Mark calls them – but the clever and the perverse, get through the gates to make banking terrifying and, actually, to attract more of them to the system (until recently, when the Internet offered even more opportunities to the clever and perverse: think WeWork). These are the people who end up managing most banks. Their cleverness lies in embedding themselves in the transit station of banking like a leech, but unlike a leech – which sucks until it can’t eat any more – they devote most of their energy to listening to when their host is becoming aware of their scam. Then they detatch, and reattach at another bank, and resume their gorging. Their success lures other clever young people – men and women both, although there is something about masculinity that seems to make such leeching more tempting – to join the feast. Most of the joiners will end up being just modestly clever, and will either be caught out and fail or they will lose the internal political games and get stuck at a low level. But some will succeed, their ears tuned for the faint but feared signs of discovery, and end up repeating the process.
Oddly, I think banking has always been this way. There’s a reason Christ overturned the money lenders’ tables outside the temple in Jerusalem; there’s a reason Muhammed condemned usurers to hell: it’s because the truly clever hive into banking. But there are very few intelligent people in banking – intelligence being not the ability to solve puzzles for one’s sole benefit as cleverness is, but being the ability to self-reflect that puzzle solving ability onto one’s own struggle for purpose and meaning. Clever people are barren; they serve no purpose except to feed their own hedonism. Cleverness is not incompetence, though – rather, it is problem solving without reflection, without recursion. Clever people are, in essence, computers without any ghost in the system: they can’t recognize that they are part of a whole, and at the same time, cannot see their own needs or desires or attractions as part of a larger system. Intelligent people, on the other hand, recognize that doing themselves good is inherently barren: we all will die. Serving our needs is inherently meaningless, and an intelligent person sees that and reflects and seeks to find – maybe impossibly – some meaning to serve. And real intelligence continues to self-reflect – it recurses on itself, it challenges the notion of meaning that first comes to mind, it dives deeper and deeper and refuses to accept even a complex and well-articulated notion of meaning, no matter how tempting it is. I find it interesting, in fact, that some of the “smartest” people who have made fortunes in banking while also being philosophers – David Ricardo, say, or John Maynard Keynes – have produced only morally vacant thought. Only Spinoza has managed to combine a stint in the business with a truly insightful moral philosophy – and he remains the most humanistic of the early Enlightenment thinkers. Intelligent bankers are rare, but they can exist.
In any event, what’s been astonishing to me in the last few years – as I took a break from banking for a few years, and then returned – is how many intelligent people there are on earth who look at banking and both marvel at and revile it. I’ve had great conversations with lots of them, and usually by the end they see what I see, this marvelous complex and oh-so-very human construction, this money system which encapsulates everything there is about being human – self-aware, social, connected, afraid, exchanging, sharing, taking, giving, and doing it at levels beyond our own awareness. But at the end they see the same thing Mark sees: the system is run by clever, and many truly clever people, who are not that intelligent at all. Intelligent people can see that – and when you connect intelligent people with senior, very clever bankers, the very clever bankers quail and retract.
Mark was very kind in his essay in reference to me, actually far too kind – but his choice of title was spot on. The Good, The Bad, and The Ugly stars Clint Eastwood, Lee Van Cleef, and Eli Wallach, respectively. Most people want to identify with Clint Eastwood – after all, he gets away in the end and is tall and handsome. But he’s also forced to understand his own motivations, and he reflects on them, and he acts based on those reflections. The battle scene where he is confronted by the alcoholic Union captain who can’t stand the sight of the slaughter he must by duty create gives me chills every time I see it – and I watch the film annually at least. On the other hand, most people would think Lee Van Cleef is the kind of banker in the story – and he is enormously clever, ultimately to his detriment, and an earlier scene reveals the depth of his depravity as he takes advantage of the Confederate losers of the war without consideration or remorse. Most of us, however, are really like Eli Wallach. We stumble through life, trying to win at a game here and there – a career, a relationship, an investment – while at the same time forgetting that the system that contains us – the human system, the system which embraces everything we do, including the planet that cradles us while we’ve been growing through our infancy and often shitting the crib while doing so – remembers our every act and is preparing for its revenge, or rather, the feedback loop that teaches us the moral lesson. The truly clever fear this; they’re listening for it and are on guard. The good, well, they listen too, and they actually hear, and reflect, and incorporate, and change. But most of us just stumble.
I can still remember when I first saw The Good, The Bad, and The Ugly; it was on Maine public television, starting at 11pm on a Friday night, and while I was planning to watch Cinemax at 11:30, once the movie started I couldn’t change the channel: I was hooked. I knew that what I needed to be in life was the Man with No Name – Clint Eastwood – but I also knew, if I reflected on it, if I turned my own intellect with honesty towards my heart, that I was Tuco, Eli Wallach. I knew that I would be balancing on the box at the end, hoping that the Man with No Name would shoot the rope, and hoping that when I fell I wouldn’t crack my head on the fortune, knowing that I probably would. I’ve been balancing there ever since. I’m not clever – not truly, not modestly, barely intelligently. I’m human. Forgive me.