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They Are Sociopaths

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February 28, 2010 – Comments (6)

I am reading an post by Yves about trying rein in banker's pay and Yves suggests, "The evidence that US capital markets firms are firmly in the hands of hopeless sociopaths continues to mount."

I wish I had details about this video I saw years ago that basically showed the same parts of the brain in criminal sociopaths are underdeveloped in corporate executives.  

I have to agree with Yves on this one:

The fact set is undeniable: the big firms in the industry engaged in a massive campaign of looting, of running enterprises in which the employees were consistently overpaid relative to the risks and true profits of the firms. The result was that they were overleveraged. The only reason the industry survived was due to massive public subsidies, from equity injections to special lending programs to super low rates to regulatory forebearance. By any right, the firms should have failed, and the bankruptcy course should have gone full bore after the pay earned in the bubble years as fraudulent conveyance.

This post is an exceptional read. 

6 Comments – Post Your Own

#1) On February 28, 2010 at 4:05 PM, Turtleread (67.33) wrote:

You are probably right, but we had no choice at the time but to support the banks (including the really stinky ones, C, WFC, BAC, you know who you are) otherwise the entire system would have come down on our heads.  And thank you, former Senator Phil Gramm, economic advisor to the McCain campaign, he who years before took a wreaking ball to the regulatory structure of our financial institutions.  And the Bush Administation, let's put people in charge who don't believe in regulation and/or doing their jobs.  Put a UN ambassador in charge who believed in no UN, an SEC chairman who believed in Adam Smith's "invisible hand," a free hand, etc., etc., restrained staff and wide-open fraud.  The BS flowed and the big, brown river covered the country.

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#2) On February 28, 2010 at 4:14 PM, oldfashionedway (35.59) wrote:

A link courtesy of Alstry.  These clowns are unbelievable.

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/print

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#3) On February 28, 2010 at 4:22 PM, angusthermopylae (40.11) wrote:

...we had no choice at the time but to support the banks...

I've always disagreed with that conclusion.  That was Paulson's and Bernanke's push to Congress in October, 2008, but the subsequent actions and results are cause for plenty of cynicism.

--Some banks were left to fail (even the really big ones), while others were propped up.

--Some bailouts were "on a budget" (assets bought/transferred for less than the stated value) while others were given full price...and yes, I'm talking GS and AIG here.

--If it was so dang important, why isn't anyone willing to put out real numbers/details on the transactions, even over 16 months later?  If it was true, then the numbers at the time would support the argument and shut up all the criticism.

Plus, bankruptcies do serve a real purpose (in the big picture)--painful as they are, they disentangle financial obligations and (ideally) limit the damage to a single party and the first round of debtors--everyone else gets some piece of the pie fairly soon, then they go back to work.  The factory gets shut down, the people get laid off, the executives get fired, but the suppliers, banks, and bond holders get something for their trouble.

I guess I'm just a believer in ripping the (financial) bandage off, rather than dragging the pain out over 2-4 more years.

 

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#4) On February 28, 2010 at 5:01 PM, 1277507302 wrote:

I remember watching a JAG episode about a lunatic doctor who used to make the patients sick and then turn around and cure them, basking in the glory. I guess the bonuses are to keep all that wonderful talent from jumping ship. Please.

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#5) On February 28, 2010 at 11:49 PM, buildgreen (< 20) wrote:

dwot I hate to be a critic... your highly rated yet all I have seen over the last year is you forwarding others peoples articles. Do you or did you post original content at some point that I have missed?

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#6) On March 01, 2010 at 5:42 PM, dwot (45.74) wrote:

I guess you did not open the links to original content.  But you are correct, I used to spend hours upon hours doing analysis and original write-ups but probably for the last year and half I have mostly just referred to articles that I think are worth following with my comments. 

I mostly wrote to help me to analyse things but I found I was spending a lot of time and just not liking what I was finding.

Everything I was writing in 2007 and 2008 was original analysis and then it started slowing down.

It isn't as buried on blogspot as it is here.

http://makingsenseofmyworld.blogspot.com/ Report this comment

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