When worlds collide, bad things happen

One of the great treats about living in New York City is that roughly 98 percent of the population here can quote every line from every episode of Seinfeld. Well, it was a famous line by George Costanza that has aided me in correlating my recent disappointment with the industry that is Wall Street and the disappointment that I imagine many in the Valley are feeling about native son Marc Dann and the disgrace he brought to himself the Mahoning Valley:

“Worlds are Colliding, Jerry.”

I say this because I see a commonality in what has happened to Wall Street of late that contributed to the mortgage crisis, and what has happened to men like Dann. A deadly cocktail of arrogance and ignorance is contributing to the downfalls of the financial and political institutions alike.

For the financial institution argument, I would declare it to be more two parts ignorance and one part arrogance. That ratio may surprise many readers who buy into the stereotype of Wall Street bankers as ivy-league educated smart and savvy men and women who use their talents to grow their wallets, while thinking they are the masters of their universe.

Most people I know in banking here are good people, who simply want to live their lives well and be successful at what they do. But finance and banking has become compartmentalized. And the pieces of paper we institutions buy and sell to each other followed the same fate. A person in New York who is wrapping a subprime mortgage and selling it to another banker is not thinking about the person who needs to choose between gas in the tank and this month’s house payment.

We no longer find it necessary to think about the big picture in our daily actions. We have created a method that allows us to reward ourselves for the complex ingenuity of new financial systems and products without recognizing its ramifications on society.

Regarding our political leaders, the cocktail for downfall seems to be two parts arrogance and one part ignorance. Politicians who build their careers by charging forward no matter the cost become convinced they are invulnerable. They forget that they are in an office by way of privilege, not right. The arrogance trumps the ignorance because most politicians today feel it is okay to placate their constituents by unfairly blaming other groups for their woes, without having to sit down and truly study the cause and effect of issues at hand.

When the governor of New York recently stepped down amid a sex scandal, there were many on Wall Street popping the bubbly. That is because when Eliot Spitzer was state attorney general, he didn’t just rail against the immoral actions of the Enrons and WorldComs; he built his campaign for governor on the backs of people not involved in the crimes themselves.

In both business and politics, what’s needed is a renaissance man approach. They should look past the privilege and power of their offices and see instead an instrument that allows them to make life better for the people they serve.

Prescott Bush

I had my worlds-are-colliding moment while watching an excellent documentary on PBS on the life President George Bush the elder. It mentioned that Bush’s father, Prescott Bush, was a man who worked on Wall Street and was part of a group of individuals who frequently consulted with the president on all matters that affected America, from foreign policy to finance. These men took their role in government and finance seriously, and did so while understanding that the advancing the cause of America was to advance their own lives. John McCain and Barack Obama (assuming he is the nominee) could set such a tone in their own ways. But it will take more than two men to resurrect the institutions that have kept America strong. It will take an individual effort at all levels.

X Eric Planey, a Mahoning Valley native, lives in New York and is Vice-President Leveraged Finance for the Bank of Tokyo-Mitsubishi UFJ.