More stories of bankers behaving badly

Kevin Roose is being compared to Michael Lewis for his inside Wall Street book “Young Money,” which hit stores Tuesday. For the piece, Roose followed eight young bankers during their first years at various Wall Street firms. As an aside, he also managed to sneak into one of the most secretive parts of the club – the Kappa Beta Phi fraternity.

New York Magazine published the story of sexist jokes, men in sparkly gold skirts and bankers cracking jokes about the financial crisis. The list of important men and women members of the “fraternity” includes CEOs, hedge fund managers, heads of businesses and even Mary Schapiro, former chair of the Securities and Exchange Commission.

After sneaking into the event, Roose is treated to antics that have every financial PR person either doing damage control or sighing with relief that no one from their firm was mentioned.

After being discovered, he was escorted out, but not until after an attempt to bribe him with future stories for keeping this one quiet. Here’s his final takeaway from the event:

The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.

The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.

The last thought I had, and the saddest, was that many of these self-righteous Kappa Beta Phi members had surely been first-year bankers once. And in the 20, 30, or 40 years since, something fundamental about them had changed. Their pursuit of money and power had removed them from the larger world to the sad extent that, now, in the primes of their careers, the only people with whom they could be truly themselves were a handful of other prominent financiers.

Perhaps, I realized, this social isolation is why despite extraordinary evidence to the contrary, one-percenters like Ross keep saying how badly persecuted they are. When you’re a member of the fraternity of money, it can be hard to see past the foie gras to the real world.

But Roose’s book isn’t about the heads of these firms. It’s about those doing all the grunt work. Bloomberg BusinessWeek’s review by Nick Summers said many of the subjects came to see Wall Street as “amoral”:

Starting in 2009, Roose, a reporter at the New York Times and then New York magazine, persuaded eight new hires at the nation’s biggest banks to let him into their lives as they learned the ABCs of finance and Wall Street culture. Between the nondisclosure agreements that bankers sign and the hypervigilance that PR and compliance squads wage against leaks, this was akin to eight powder kegs befriending a butane torch. But it’s easy to see why these young souls trusted him to keep their participation a secret. Roose views them as people and not types, riding shotgun as they drink, party, puke, box, eat ’shrooms, and stifle bonus rage (sums that seemed magic-beanstalk-high to a college senior are suddenly insults). And he’s adept at understanding how working in finance changes them.

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As they vent—and Roose listens to enough of their psychological problems that I hope he charged a co-pay—the eight informants give increasingly knowing takes on Wall Street. High finance isn’t moral or immoral, the young bankers learn. “What Wall Street was, I heard over and over, was completely amoral,” Roose writes. Often a deal will have some positive benefit to society; often it won’t. Either way it’s a coincidence.

In a Q&A with the New York Times reporter Mary Pilon, Roose talks about finding the subjects and some of the problems people face on Wall Street:

Q. You cite executives like Vikram Pandit and others as up-by-their-bootstraps examples of upward mobility. But recently, there’s been much discussion about whether the chances ofmoving up the economic ladder are lower today than they used to be. Where does this leave, say, little Pandits, rising up the ranks?

A. I don’t think it’s a dead idea at all. I think there is a lot more of that in this generation than prior generations. I think that Wall Street is less attached to the idea that it’s a catchall for the elite. There are fewer blue bloods than 10 years ago, and I think that’s a reflection of how professionalized it is. You can’t just walk in having majored in art history. You’re really expected to know your stuff, expected to have done an internship.

Q. How has that professionalization affected who is going to Wall Street, though? Is that a good or a bad thing?

A. I think for a number of decades, there was this very odd recruiting climate where Wall Street and consulting firms became the default option for students at good schools who didn’t know what they wanted to do after graduation. If you knew you weren’t going to be a doctor, but you didn’t feel sure about your options, Wall Street was an incredibly enticing option. It created a generation of accidental bankers, and some of them did the wrong thing. I think now what you’re seeing with the competitiveness is the people who became bankers, they really want to be bankers. And I think that’s a good thing because it’s better for the banks and the rest of the economy to have people who are talented.

No matter how you feel about bankers, their hours and their morality, the book has made a great publicity push and seems like it’ll be a great read.