Conversations With Wall Street. Peter Ressler
as your number, only as powerful as your paycheck. Your value as a human being is measured by the size of your bonus.
What the authors describe is a system that has gone mad. A system, as they say, “based on blowing itself up.” A system that rewards dishonesty and punishes ethical conduct. A system, quite simply, that has lost its moral compass and forgotten its fundamental purpose.
At one point in the book, Peter and Monika ask, “What is a mortgage?” Like many of the simple, pointed, and powerful questions that the authors pose here, this quiet query presents a deep moment of reflection.
To most Americans for most of our modern history, a mortgage was a big deal. A very big step for any family. It represented a piece of the American Dream. It was a promise, usually held for 30 years, that if you worked hard and kept up your payments, if you acted responsibly and behaved with honor, you, too, could own your own home. You, too, could partake in the promise of America.
How cynical, then, to see the mortgage turned into an economic weapon of mass destruction! How devious and perverse to manipulate a mortgage into an instrument to cheat, rob, defraud people of their life savings—and to laugh all the way to the bank with outsized, self-awarded earnings, as if something praiseworthy had been accomplished in the transaction! Of course, to add insult to injury, the people doing this didn’t just laugh all the way to the bank—they were the bank!
There is something sick in all of this. America has suffered a Great Disconnect in the last decades; something decent and honorable and important has come undone, come apart at the seams.
There used to be an implicit contract between and among the people of the United States of America.
It was a contract that said we are all in this together. That if all work hard and look after ourselves and each other, we’ll all find a way to build something worthy, something that taps into the best we have to offer. We’ll get ahead financially, sure. But even more to the point, our families and our communities will flourish. Not just “more,” but also “better.” A better way of life, a better way of living, a better sense of who we are, what we stand for, and what we value.
In business, the old contract said if you take risks, you can earn a reward. But the people we meet on Wall Street weren’t taking risks with their own money! They were taking risks with our money—and then awarding themselves entrepreneurial rewards!
In business, the old contract said great power also required great responsibility. In the past we grew accustomed to business leaders stepping forward to act with honor, even if it somehow hurt the short-term interests of their own company. But what we see and hear from the Wall Street of today, great power simply converts into even greater wealth, greater hoarding and greater extravagances for the few men at the top. If they are rich, the logic goes, it must be because they deserve to be rich—which can only mean they deserve to be even richer!
In business, the old contract said business was part of society, that to earn its charter, business had to serve a social purpose. Not just to give something back after chalking up a huge profit, but to link its central core purpose with something beneficial to the larger community. The Wall Street we see in this book measures its performance purely in dollars—it’s only purpose is to create more money in as short a time as possible. Shareholder value creation is the only metric, and once achieved, the only logical next step is to increase it. Money for the sake of money is the tautology that rules the game.
But The Game is ultimately a very ugly trap. And we are ultimately both its perpetrators and its victims.
Because the Great Disconnect is tearing America apart, turning us into a nation divided.
Peter and Monika give us stories and voices and real conversations, and that’s always better witness than dry statistics. But in this case, it’s worth taking a look at a few numbers that describe the country we are rapidly becoming.
The top 1% of Americans today own roughly 35% of all of the nation’s wealth.
The richest 11,000 Americans have more money than the bottom 25 million—combined.
Income today is more concentrated at the top of American society than at any time since 1928.
In fact, the United States has one of the highest levels of income inequality of any high-income nation—and the gap has only widened since 1980. Today the United States is more unequal than Canada, Australia, the United Kingdom—even more unequal than Russia, where wealth belongs to the often corrupt oligarchs, plutocrats who owe their money, power, and position to their proximity to Russian politicians. That we are more unequal than Russia—more unequal than Russia!—is a sign of deep and corrosive system failure.
I said that Peter and Monika ask powerful, pointed questions.
Here’s the string of questions they ask that I like the best, the questions that could easily serve as the only preface this book needs:
“What did you do? Why did you do it? Did you try to stop it? If not, why not? What were you thinking?”
In the book Peter is asking these questions of one of his Wall Street buddies, calling him to account.
But when you read this book, you’ll know that the authors are asking each of us the same questions.
Three years after the meltdown—but well before the damage has healed and people’s lives have mended—Wall Street is back to business as usual. The bonuses are as big, if not bigger than before. And the power is even more concentrated and the lesson, if there ever was one, has been lost.
So what happens now?
The world around us is changing. New nations are rising up, new voices are emerging, new demands are being made.
Can we keep doing what we’ve been doing—and simply hope that somehow America will find its way forward?
When we look back on America in years to come, how will we answer Peter and Monika’s questions?
What did we do? What were we thinking?
What did we do to make a difference? To speak out, to give voice to America’s better self? What did we do to stop the madness in a system that routinely blows itself up—and with it destroys the lives of millions of our fellow citizens? What did we tell our leaders—in business, government, non-profits—that we want from them? That we demand from them? What did we insist happen to fix a broken, self-destructive, short-sighted system?
In the end, Peter and Monika’s “Conversations With Wall Street” is an invitation to a far more important, far more far-reaching conversation. It is a Conversation With America that needs to happen.
Read this book. Underline it. Then sit down and talk with your family, your friends, your neighbors about it.
If we all start our own Conversation With America, stimulated by this book and carrying forward, then in the years to come, we will all be able to answer Peter and Monika’s question with a feeling of personal satisfaction and national pride. We’ll know that we started a Conversation With America that ultimately lead to a better, more honest, more ethical, more purposeful, and more sustainable America.
Let’s start now to create our own Great Reconnect. Let’s put America back together; let’s bring America back together, from Main Street to Wall Street.
Alan M. Webber
Co-Founder, Fast Company magazine
The Epiphany
“The industry forgot its purpose.”
- Goldman Sachs Structured Bond Trader
On September 15th, 2008 at 11:31 a.m., I received an email from the president of my biggest hedge fund client—a firm that managed over $40 billion worth of assets. The subject line read: “Want to interview all Lehman RMBS team and CMBS team ASAP.” In a follow-up phone call, he told me that for the next few weeks, he and