Probably for the first time I am reproducing a comment from a reader in it’s entirity. As an ex GE Finance and exCiti man , the following parable stuck closer to heart.
Here are some nice views from Randall Stross of http://enhilex.com/ on current economic crisis- If his touch a chord so do write back
Hello Everyone, There is a lot of talk about what made Wall St. fail. Having spent some time inside firms that played pivotal roles, I must say that I believe there are as many reasons for the failure as there are ways to manifest lack of integrity, diligence, lack of responsibility and accountability. As recent failures demonstrate, all attempts to legislate all those characteristics have failed – for the same reasons. The manifestations I found were like these following examples:
1. Here’s a short conversation in a hallway. I would later realize that we were standing in front of the manager’s office… Me: “So , why don’t your models account for employment as a factor that influences the borrower’s ability to pay his mortgage?” Him, looking at me like I had 2 heads: “Er, uh… Well, that is because… very long pause… there is no reliable data on that. Yes, that’s right. So we leave it out…” That was the reply from a very intelligent person who knew he would be shown the door if he’d told me the truth. Lay persons understand that models are useful, though imperfect. But the example given above is something else. This model’s design was intended to mislead. People who do things like this may have been “good” employees, but they were not good citizens. The “good” employees remain… Anyone with an IQ over 50 knows that past performance does not predict future performance when you don’t account for the differences between past and present in the entirety of the nexus where the question belongs.
2. Whilst sitting next to me in a development lab, a young reporting analyst was directed to “hard code” the sum of a column of figures headed for regulators – because the bottom line “wasn’t good enough.” The young man hesitated. Relieved, I put my hand on his wrist and quietly suggested that he ask for our client’s manager to send that request to him in an email. The manager left the lab, calling us obscene names. Of course, the email never came.
3. A friend of mine working as a funder for a large mortgage firm was fired for refusing to fund a loan she knew was fraudulent. I’m proud to know the people in #2 and #3. These people have integrity and loyalty to principles the investing public can count on. But they both lost their jobs and have moved on into other fields, away from Wall St-ish areas. So, it is the people who are left that will work to rebuild confidence in the market. OK, now — who’s left? I wish we could let it all fall down and stand back up without the bums who caused it all. We do know who they are…
ps- Hope he is neither a spammer or joking. This does bring a lot of old memories when I worked for the big hot fin companies. Do you have a personal story like that.