- So, Fabrice Tourre, it really was a crime.
In the end, Wall Street greed drove Mr. Tourre to lie and deceive. -- SEC lawyer Matthew Martens
Former Goldman Sachs vice president Fabrice Tourre was found liable today. He knowingly deceived investors about the real value of the mortgage-related financial products he was selling. They were toxic bombs. We now all know the story. So do tens of millions of others who suffered from the implosion of a deregulated financial sector's ability to create wealth for itself and pass the risk on to, well, tens of millions of others.
I'll let HuffPo reflect my frustration of the gov't's ability to bust only a foot soldier so far.
John Taft, CEO at RBC Wealth Management, posted this on LinkedIn yesterday. He explores the need for moral exemplars on Wall Street.
Yes, please, yesterday already.
But let's be clear about why it's a slippery slog to finding the higher moral ground in lower Manhattan. It's one of those nasty human condition, Pogo stories: we have met the enemy ... and it is us, etc.
The debacle in the financial services was a conspiracy of self interest. This self-interest is built a priori into the assumptions of our economic system. We agree to make ownership an abstraction. We turn ownership into mortgages, then bundle them, then create options on those bundles, then collateralize the risk associated with those options. (Did I get that right?
Don't get me wrong -- there are benefits to this. A mortgage made it possible for me to buy my house.
But something happened along the way. We've leveraged ownership into an abstraction that makes it possible to create personal gain at public risk.
That last point really matters. Our (not ideal) moral center of gravity prefers an extractive economic system - and the only risk that concerns an extractive economy is risk to one's self.
The point is that when we make ownership an abstraction, and can sell off the risk (poor AGI), we have license to harm others, while not being held accountable. Hey, there are always winners and losers, right?
Here's the issue with Fabrice Torre: this kid (28 years old in 2007) was just part of the process. If he lacked ethical grounding, he was only reading the cues in the culture around him. He was an echo of the culture he was in. He was an echo of his boss.
Culture includes the ways of thinking and acting that are taught and reinforced. The top leaders create organizational culture. That's what leaders do. Granted, this terrible mess reflects the desperation of the human condition, but even that does not exonerate the leaders on Wall Street who knew what they were doing. This mess is on the people at the top.
Doesn't every leader know this?