The Telegraph today has a story that reveals much about what is wrong with childrearing and the investment banking industry today.
A teacher at a Houston private school allegedly made some remarks about the financial crisis which were overly broad and in bad taste. Specifically, the claim is that an 11th grade teacher said:
that somehow both Lehman and Barclays made a bunch of money on the Lehman bankruptcy, and that all investment bankers were ‘sleazeballs’ and dishonest”.
Well, assuming this quotation is accurate, neither Lehman nor its employees did; that part is 180 degrees wrong. But the bit re Barclays is close to the mark. Barclays scooped up the US broker-dealer (and no US b-d has ever gone bankrupt) on terms better than it was negotiating before the firm failed (and Barclays competitors were upset even at that possible deal being too favorable to the British bank, since it was doing the “good bank” part of a “good bank/bad bank” deal, and an industry consortium was funding the “bad bank”).
So it is correct to say that Barclays did well out of the Lehman BK.
Now to the general question of investment banker ethics. I left the industry more than two decades ago, even though I continue to consult to it, and conduct was better then (it noting else, image counted for more, and the investment banks for the most part had recently been partnerships, so some of the old habits were still in place, and one was a deep-seated concern about liability). Although it was not the reason I left, no one even then would dream of holding up investment bankers as models of ethical behavior. I had a well-meaning client pull me aside and tell me I had to quit caring whether the deals I was teeing up made sense, it put me at a competitive disadvantage (and mind you, I was working mainly on the buy side).
A few random more contemporary sightings. I happened to speak to an investment banker today (and I had not seen this article then) who volunteered, “You have to be able to compromise your ethics to be in this business.” I had another helpful contact remark, “I was part of the problem” (and he meant the practices that caused the meltdown).
In my book, ECONNED, I describe how the industry has become systematically predatory, and describe at some length how that has come to pass.
So I am sympathetic with the teacher’s point of view, but making broad-brush, unsupported and not fully factual charges against an entire industry is poor judgment. How serious a failing is that? Well, an offended parent wants to exact vengeance not just on the teacher, but on a few bystanders too. From the Telegraph (hat tip reader Albert):
Mr McGee, who is Barclays Capital’s global head of investment banking, penned a rambling five-page letter to the board of trustees of Houston’s Kinkaid School, asking that the teacher and two other staff members be fired.
In the letter, Mr McGee, who is alleged to have an eight-figure salary, claims that history teacher Leslie Lovett has a “leftist invective” which “is neither accurate nor part of the approved curriculum”….
His son, apparently with “tears in his eyes” went on to defend his father, saying he had been “working around the clock trying to save 11,000 jobs and that she had absolutely no idea what she was talking about”….
Mr McGee now wants Ms Lovett, headmaster Donald North and upper school principal Michael Saltman, to be fired. The banker was also angered because his son, quarterback in the school’s American football team, was allegedly told he and his teammates were not allowed to dress up as cheerleaders to perform a song-and-dance skit at a pre-game rally.
Yves here. OK, the teacher was a jerk or a fool, take your pick, but McGee is a horse’s ass. When I was a kid, I had teachers abuse me in far more persistent and meaner-spirited ways than this apparently tender boy did (since when is an 11th grade boy reduced to tears in general, and defending his father in particular? Most kids that age are plenty ambivalent about their parents) and no one would have dreamed for asking for three resignations over that. But now protecting children’s delicate psyches is taken seriously, that’s why the dubious claim of the boy being on the verge of crying is thrown in.
And let us face it, would these charges get anyone this upset unless they had some plausibility? If the teacher said, “Investment bankers all have cloven hooves and engage in ritual sacrifices of kittens” the boy would have simply regarded the teacher as nuts and said so. The industry IS disreputable, deservedly so; the only element that is debatable is whether all its members are, or merely a pretty high percentage. And the son has no objective basis for evaluating where his father sits on this spectrum. Moreover, McGee went from a senior job at Lehman to a senior one at Barclays. So McGee might have interpreted the teacher’s comment about Lehman employees making money as a result of the bankruptcy as a personal attack. And throwing the football skit in was a big tactical error. People do not get their way all the time; that’s life, but McGee thinks he can dictate to the school on behalf of his son and his buddies.
But dear readers, take heart. If McGee wins, he will surely lose. Even with the economy in the crapper, top colleges have vastly more applicants than they have admission spots. This row will become even more visible if McGee were to prevail. Schools do not have to disclose their admission decisions. I imagine quite a few would be loath to take the child of someone who is so quick to go to the nuclear option when he has been crossed. If the boy is a strong candidate, he should secure a spot regardless, but it isn’t hard to imagine that this little stunt will restrict his choices.