The Big Short was a challenging film on many fronts. For someone not working in finance, it was probably quite shocking. Even for me then, after watching the film I had to take drastic action and reaffirm my “massive long position”… in this case my own career choice, ethics and morality.
Yet, I was fixated. This movie was all about me, my career in financial services to date, and the intricate fun and games that I have been involved in working in this industry. Perhaps “fun and games” is a gross understatement of the seriousness of the affair, because when working on instruments that have been acutely described as “weapons of mass destruction”, you realise that you had been involved in some serious shit.
It was in 2007 that I was sent to New York to work in the “derivatives and structured finance” group just as the whole thing unfolded. I could feel the building up of pressure before it spectacularly released. When it did, it was surreal as bankers leapt for cover, trying to come up with clever and esoteric means of offloading their portfolio of toxic financial instruments to unassuming hedge funds. I remember working on deals late into the night with large investment banks and a well-known insurer who was selling insurance on all these “AAA” mortgage-backed securities, not thinking much of it at the time. After all, I was simply doing my job. All sounds familiar huh? Simply doing something in the name of duty…For some people, this has turned out to be a war crime.
Roll on to 2016 and the memories of 2008 still linger. Financial markets severely wobbled this week and banking stocks were hammered as the wounds of the crash of 2008 were re-opened. I joked with our assistant that we could soon be on the front page of the Financial Times, photographed walking out of the bank with our possessions in a cardboard box, not knowing what was to come next…just the way the Lehman employees were seen doing in the film.
Since 2008, the level of banker bashing has been savage, particularly in the UK. I remember going on a skiing trip in 2012 and meeting my fellow skiers for the week. When I admitted that I worked for a particular large internationally active bank at the time, one charming middle-aged policeman from Leeds hissed at me. He reminded me of Hannibal Lector from the Silence of Lambs, such was the level of discomfort I felt due to his venomous tongue. The irony was that this most upstanding member of society turned out to be the least popular person on the trip for his incessant gibberish and callousness….
Is this criticism and rhetoric towards bankers justified? Not so totally it seems – it was music to my ears when I read this week that people working in finance are the most generous when it comes to giving and charity. This reinforced my belief that the vast majority of people working in investment banking are simply going about their day doing their job to the best of their ability and contributing their fair share. Like myself, many of them have ended up working there because they somehow fell into it – to chastise so many for the mistakes of so few is like smashing a walnut with a sledgehammer: The result is massively disproportionate to the intended effect.
Societies also need banks – that’s the truth, even the firebrand socialism of Jeremy Corbyn and Bernie Sanders would admit as much. Banks allow corporates to raise funds for infrastructure and other projects. They also allow them to raise equity, so they can grow, contributing towards overall economic growth. The problem is that the actions of a small minority, who almost brought down the whole financial system, have tarnished the reputation of the majority of people working in finance (including me).
For millions of people throughout the world, the effects of the crisis are still lingering. From bankrupt southern European countries where the lives and prospects of so many young people have been destroyed to all those people who were sold “NINJA” (No Income No Job No Assets) loans and had their property foreclosed once the whole crisis unravelled, these people are still suffering. The Big Short reminded us of all this and it is important to reflect and contemplate on the carnage caused by the crisis. It also illustrated to the public, in a very clever and gripping way, one of the most calamitous periods in recent history and the shameful and morally bankrupt practices that caused so much wealth destruction and hardship for many.
That said, I have concluded that my conscience is clear with my decision to continue to pursue my career in finance, no matter whether the practices of so few at the time were so morally scrupulous.. I have no other choice but to simply reflect on this and carry on. Finance continues to serve me and I serve finance as well. Some may say I am weak, however better the devil you know than the devil you don’t, as they say.