For God's sake, let us sit upon the ground
And tell sad stories of the death of kings...
--Richard II, Shakespeare
The war is over. Unrepentant Axis soldier [James Jimmy G.] surveys the battlefield on his way home from his new job as a "consultant" to the industry he once ruled from the inside. The wind-swept gash where Manhattan's mighty towers once stood recalls to him the collapse of his spectacular career. As an analyst during the heady boom years, he occupied the catbird's seat, at [Boston Surety Bank], the pinnacle of the banking world. Back then he moved the markets at both ends: from the retail buyers who hung on his every inflated price target and Buy rating touted on CNBC, the siren of the bull market, to [B.S. Bank’s] true clients: the issuers themselves.
His reputation tattered, [Jimmy] now labors down Liberty Avenue, pausing at Broadway, where the New York Stock Exchange looms like a reproach, before he veers off toward Wall. He's been banished from banking for life. No matter. He still has his plush $5.2 million apartment on the Upper East Side and a good chunk of his fortune—or at least as much of it as those vultures of the plaintiffs' bar haven't devoured since his immunity deal. For $15 million he'd bought himself immunity from criminal prosecution—a commodity that used car salesman of a State Law Man offered him years ago at what [Jimmy] admits in retrospect was a bargain basement price.
But [M. Wise], [Johnny Bigg] and others seeking jackpot justice still circle menacingly, with their relentless sorties of civil suits. How unjust! Through the veil of self-pity and self-rationalization, there lurks a particle of truth. The System made him do it, Jimmy whines, with some justification. Why should he be the fall guy? What about the crooked companies themselves, and their high-flying, eager-to-deal CEOs? And the other BSFB honchos and bankers who egged him on, what about them? The sophisticated mutual and pension fund managers and investors who'd eagerly drunk the CMO laced Kool-Aid, weren't they complicit too? Why should he shoulder all the blame? What, Jimmy wonders in his heart of hearts, about the blood on their hands? A plaintive murmur betrays his lips as he veers north on Greenwich, and [Spendthrift Trust Mortgage] headquarters comes into view: "I am more sinned against than sinner."
Like Zeus entangled in one of Hera's dastardly schemes, [Wes S.] rages in his familiar perch atop Wall Street's Mt. Olympus, the glass and steel edifice at 999 Greenwich St.—Spendthrift Trust Mortgage headquarters. The prompt obedience Wes once commanded from his sons and board members is crumbling. With his taste for blow, Wes’s first-born son and heir to the throne has traded his seat on STM’s Compensation Committee for a bed in rehab. And STM's Board—once Wes’s board—these days expects answers, which makes his life so much less convenient than it once was. He curses that foolish, loose-lipped Jimmy G., with his eager Congressional testimony and self-important e-mails. Not to mention that pestilential, meddling interloper Phelps. But Wes is still the king of Wall Street, a Republican Party stalwart, and his curses are still echoed by such of his minions as wish to pay homage to the King. Their ranks, he well knows, would always be filled with those seeking favors, in the form of campaign contributions perhaps, or bon mots resembling inside information.
In his heyday, Wes reflects, he even had the power to get the Glass-Steagall Act repealed, laying waste to the Chinese Wall that had separated commercial banking from investment banking since the Depression. This triumph had brought Wes’s own Cerberus, Spendthrift Trust Mortgage, to life; empowering him politically and enriching him beyond even his avaricious dreams. Wes also reflects smugly on having made good on his promise to "drive a nail through" the ass of J. Meed, the former STM chairman, without anyone noticing or caring much. What an annoying little bitch he was.
Donating that seven-digit grip to the 22nd Ave Gym on Jimmy’s account was, after all, a fabulous business move. By stroking Jimmy at just the right moment he had gotten him to double jump TTA's stock rating on the eve of its wireline spin-off, thus ensuring $50 million in advisory fees to Spendthrift on the deal. Though Wes got a black eye in the ensuing flap when his emails went public, he had limited his personal damage with trademark finesse. Still, he'd been tarnished and now his life was harder. But he was still king. He'd weather the storm. Eventually, it would all pass over.
Meanwhile, as State Law Man’s campaign of ethics cleansing winds down, attention turns from enforcing morality to legislating it. Three thousand miles away, on the other coast, Nick Win’s broadband heist has gone unchecked––another job pulled off without consequence. More Bacchus than Jupiter, Win still rules his opulent Beverly Hills corporate headquarters, his god-sized ego and cherubic body ensconced in his very own Oval Office. A meticulous reproduction of the White House original, the office decor is a telling relic from his heyday.
Like the other tech titans, he focused like a laser on the favors to be gotten from D.C., then got out while the getting was good. All great sport, he thinks. Now he is rich as Croesus. Sitting solidly on close to a billion dollars (not counting his $50 million Hills estate), none of the plots dreamed up by the SEC or Phelps or any of those pesky plaintiffs' attorneys have managed to touch him—yet. He reclines in a chaise lounge stationed by the window: birds chirp, palms sway--ahhhhhhhhh--it's just one beautiful California day after another. Win absorbs the idyllic scene as he eats from a plate of ambrosia. A fine young servant girl manicures his nails while another dabs a napkin at the mango juice running down his face.
Between the two coasts-–Wall Street's Rome to L.A.'s Constantinople-–across the vast moors of Middle America, bartenders, engineers, schoolteachers, housewives and former retirees sell drill bits at Home Depot, struggling to replace their smashed retirement nest eggs and foreclosed homes. They pore over their brokerage statements with shock and awe: losses of 60, 70, 80 percent. The faces are different, but the emotions the same: fear, disbelief, panic, and, finally, anger. They curse the false prophets who brought them no profits but only financial devastation.
A few years ago the curtain dropped on a Manhattan tragicomedy, before rising on a new one. From the ‘90s through the summer of the so-called Perp Walk and, it turns out, up until this very day, Fortune 500 executives and their bankers and security analysts wooed Wall Street and Main. Their theatrics rivaled anything Broadway had to offer. The Street enjoyed a spectacular run and played to sold-out audiences worldwide. Retail investors clamored for $2,000,000,000,000 in tickets to the greatest show on earth. The show's executive producers and leading men counted their take of the gate. The banking titans plundered the riches of their kingdom. But when the smoke lifted, Wall Street lay in ruin; a crisis more serious than the '80s-era Michael Milken junk-bond and Ivan Boesky insider trading affair, the early '90s Prudential Securities limited partnership debacle, or the NASDAQ price-fixing scandal of the mid-90s. This time venerated institutions and nearly $7 trillion dollars evaporated, almost overnight.
The collapse of Long Term Capital Management, Enron, Bear Stearns, and the Internet stocks are related, each finding its roots in one or all of fraud, book cooking, and reckless risk taking. In the case of the telecom industry, the foreknowledge and complicity of the investment bankers seems the clearest. The scandals showed how banks in collusion with their analysts, who presumed to advise the populace on the value of their investments, manipulated and pumped up markets. Dupes of corrupt and greedy companies they were not. On the contrary, they engineered the conflagration, stoking its flames with high-test jet fuel. The collapse lost far more money and jobs than the preceding, and related, dot.com implosion, which seems almost quaint by comparison. Telecom, unlike the dotcoms, spanned a large, basic, existing American industry; one hitherto thought to be as big and as safe as a utility. That chimera was eclipsed when the banks themselves—the very bulwark of American capitalism—turned to tinder, bringing the economy to the brink, and calling into question the very principles that built the greatest nation.
People seek scapegoats when markets collapse. Though some bubbles are less rigged, more excusable, and more naturally market driven than others, all are the calamitous result of audacious experiments in empire building and power grabbing within shifting legal, economic, and regulatory environments. Standard Shakespearean motifs punctuate the plot lines; the leading men exhibit all the classical tragic flaws: hubris, voracious greed, treachery, unbridled arrogance, delusional ambition, regicide, conspiracy, and incestuous dealings.
Class warfare broke out between laissez faire theorists, Wall Street patricians, the nouveau riche, hungry politicos, and the unarmed proletariat. Ethics took a back seat to profits. Meanwhile, profits grew ever more theoretical. Theory, for a time, had a lot of sex appeal. But when the theory swelled to post-structuralist frenzy, the time for total deconstruction drew nigh.
The titans of managerial capitalism--once able to rationalize their corporate greed and self-dealing because their acts baked a bigger pie for everyone--soon were indistinguishable from the robber barons of centuries past. But the investment banking industry now gets to respond impassively to any and all comments or calls for symmetrical justice that, well, now they've made their peace with the regulators and the SEC, to whom of course they admit or deny no guilt. Today, this kind of slam-bam thank you ma'am government-sponsored charade is supposed to stand in for the truth, shutting everyone up so we can all just mooooove on.
Whether a CEO was bribed to funnel new issues and merger and acquisition business is almost petty compared to the larger racket of the "synergetic" investment banks. Unfortunately it is the relatively small matters of personal venality that get the ink in the daily papers. The grand racket itself is the kind of tale no prosecutor or plaintiff's lawyer can tell in a court proceeding and no news reporter can animate in a feature, however mightily they try. Journalists miss a lot and so do prosecutors. They try, of course, but there is only so much they can do. After all, the technicalities of the quid-pro-quo comprising criminal bribery, and the ambiguities of corporate and securities law, are very hard to explain without putting a jury to sleep. They're also tough cases to prove. Especially by young and relatively inexperienced prosecutors still wet behind the ears who never did a deal and hardly know a put from a call. All too often, one senses their attraction to the dark side, almost hears the mournful scraping of those government pay stubs at the back of the desk drawer that are barely covering the one bedroom condo on Murray Hill, pooled with the spouse's salary.
Reporter egos play a big a role in shaping controversy. Some curry favor with a potentially valuable source by painting such as a hero. It’s known in the newspaper biz as a “blow-job." For instance, former WSJ and current Newsweek reporter Robert G. was Johnny Bigg's keenest fellator; no wonder he is his favorite source. Anyway, reporters are quick to sensationalize a fistfight once they've lost an exclusive. Some lawyers like to take their legal battles to the court of public opinion instead of to the courthouse. Phelps, for instance.
The truth is that banks, particularly their highest executives—the Wes’s and Tubin’s of the world-have created impermeable deniability bubbles for themselves. Really, there's nothing they like more than a big market run-up based on evanescent deals jerry-rigged on sand and air. They know perfectly well that they'll make money on the way up and money on the way down. They don't bother with the costs left to those without a home once the music stops.
Congress responds with unsupervised bailouts and passes laws like Sarbanes-Oxley—a questionable piece of legislation—while Spendthrift and the Wharton school turn to the classic feminist reeducation training camp approach: mandatory ethics classes for the kids who skipped Sunday School. But the gap in the hard math between trillions in losses and a few hundred million or a couple billion in fines is still there and hard to reconcile.