Business Standard

Jamal Mecklai: How did bankers become sexy?

Being straightforward is no longer part of financial services industry. Hiding key information has become part of the competitive edge

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I had a young man come see me the other day, the son of a friend. He was in his second year at King’s College in the UK, was keen to get involved with financial services, and wanted my advice.

I told him that the most important word in business is “integrity” — which, judging from the litany of scandals that have been unfolding over the past five or six years appears to have largely disappeared in the industry. Lawsuits, fines, resignations, collapses, convictions; everywhere you turn, there’s more and more and more smoke. And there’s no smoke — certainly not this much smoke — without fire.

The truth is that, ever since the financial services boom that started in the late 1970s on began to accelerate around the mid-1980s, ethics and morality increasingly took a back seat to immediate profits and compensation, despite oft- and loudly-quoted paeans to customer service.

Shockingly, this behaviour — which, in other arenas, would be called stealing — has persisted for years. On the one hand, became more and more expert at creating and sustaining “information asymmetry”; and, on the other, the rising tide of apparently-free money, narrow-minded policymaking and soft-touch regulation lifted many, many boats, so there weren’t too many people complaining. Through this process, most remarkably, bankers, somehow, become sexy and, amazingly, acknowledged as thought leaders.

It wasn’t always like that.

I remember when I first moved to New York in 1975, everybody I met was an actor or an artist or a musician or a dancer. Art and culture were sexy, and it was editorialists and policymakers and even some politicians that made opinion.

Wall Street was there, of course, but it functioned unseen downtown, seemingly in service to the rest of the economy. Bankers — and lawyers — were busy making money, but were boring and certainly not sexy. Nobody wrote books or made movies about them. Whenever one sidled into a bar or a cool club, they’d look really out of place. Desperately Seeking Susan captured it perfectly: The rock star or the artist always got the girl.

By then, though, the early 1980s, things had started to change. While there were doubtless several forces at play, one was certainly the fact that by then cocaine had become the party drug of choice. Cocaine cost a lot of money, and that sexy girl I was chasing just disappeared into the bathroom with that weird guy in a suit. Money had become more important and so did its purveyors. It affected everybody — I remember reading an interview recently in which an older (Indian) painter confirmed, “Before the 1980s, we never thought about money. We just painted and lived our lives.”

The final touches were things like the extraordinary artistic success of Jeff Koons, who was also a commodity trader on Wall Street, which exploded the myth that people in finance couldn’t be cool. Plus, they had the money — and, by then, most often got the girl. By 1987, when Oliver Stone’s Wall Street was released, it seemed that the entire world had jumped onto the “Greed is good” bandwagon. Bankers had become sexy.

Now, I’m all for sexy. But I’m also for straight — as in honest, not not gay.

But being straightforward is no longer — if it ever was — part of the financial services industry. Hiding key information — lying, in many cases — has become part of the competitive edge. I remember many years ago, the head of treasury at a foreign bank had asked me for help in building his corporate business. I told him, “Take your client into the dealing room and let him see and understand exactly what happens to his dollars and show him how much it costs. You will be able to charge him more than you currently do and you will have a customer for life.” This was (also) in the 1980s before transparency had become such a buzzword. He, of course, thanked me politely and moved on. I believe that bank doesn’t have a corporate business any more.

Now, of course, there are “hard-working, talented and principled” people in financial services, but the intensity of the pull, particularly over the past few years, made it very difficult for them. Witness the young man who resigned with a splash from or the chairman of Barclays, who was recently dragged through the mud.

The good news, however, is that the cycle has turned. Banks are being squeezed every which way — on capital, on compensation, on credibility. Jobs in financial services will become scarcer and will pay less. And bankers will revert to stodgy and boring, but trustworthy.

Hopefully, some of them, at least, will still be sexy.


 

jamal@mecklai.com  

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