The Glass-Steagall Act.

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The Glass-Steagall Act was also known as the Banking Act of 1933. It was introduced to control speculation, and it prohibited banks from owning other financial holding companies. The Glass-Steagall Act was repealed in 1999. (I cried.)

For most of the 90s, I worked for investment firms. I learned that investment bankers are ruthless and self-serving. My first job in finance was at an international bank. My boss was a sales guy, and he was all about his “relationships” with CFOs of Fortune 500 companies. Like Enron. And Monsanto. And lots of other shady companies. But he could not read a balance sheet. He had never studied Finance. The bank enrolled the pair of us in a MBA program at Northwestern. I outperformed my boss in our classes, and my boss gave me a bad performance review. So I quit.

My next job in finance was at a “boutique” investment firm. This firm had some academics on its staff, who were creating financial products that none of the customers understood. But it was an economic boom, so nobody cared, as long as they were making money. My firm spent an inordinate amount of time on the “fine print” in their sales collateral, which informed you that the firm was speculating. They had no clue what they were doing with your money. The only way for a woman to advance at this firm was to sleep with the boss. That’s how my boss got her job (instead of me). I quit.

My last job in finance was at a San Francisco “peninsula” investment firm. I always thought it was hilarious, how we were supposed to “regulate” ourselves. We had a “compliance” department to make sure that the sales guys’ economic claims weren’t too outrageous. We would laugh our asses off at what the sales guys wrote. It was like, “What goes up must come down.” (Seriously.) It was fun to whisper things like “S.E.C.” and watch the sales guys freak out. I don’t know why they were afraid. The S.E.C. never was going to do anything.

In 2000, my firm sold out and merged with an international bank. The sales staff left in golden parachutes, with millions upon millions of dollars. My boss's boss sold out the middle managers. They were forced to leave with a pathetic payout and a “don’t let the door hit ya on the way out”. Those guys were vested, but a few had medical conditions that no insurance company would cover after their COBRA ran out. I quit. (Insurance companies refused to cover me because I used migraine medication.)

Investment bankers are greedy. The lunches. The five star hotels. The limousines. The bonuses. These guys are the aristocrats of our age. There is absolutely no way that investment firms and banks can regulate themselves. It kills me to applaud any idea of John McCain’s, but a re-enactment of the Glass-Steagall Act is necessary. Barack Obama agrees. Of course, the Republicans aren’t going to do any business in Washington. Under your mattress is a better place for your money than on Wall Street.

Edited to add. This post is dedicated to my grandfather. He always encouraged me to keep writing.


betty-NZ said...

I guess I never really think about stuff that doesn't directly concern me until I read posts like yours that leave me with my jaw on the floor. Thanks for the post--it is quite enlightening.

Casey Freeland said...

Great post.

I'm a banker (community, not investment) so I can't relate directly. But your assessment of some persons in powerful positions with no real financial background is absolutely true in my experience. Not in my bank, of course.

It's a difficult industry in which to work, because simply by walking in the door I'm vilified in the eyes of many, no matter how nobly I try to live and work.

I'm tired of being treated like a necessary evil by some and like a dog by others.

I'm whining, I know. :)



Casey Freeland said...
This comment has been removed by the author.
MrsB said...

A really interesting post - and an amazing insight into banking. It does confirm a lot of what I already believed and I dont think I would ever want to work in such a ruthless environment.

Elizabeth said...

Very timely post, especially considering the recent news that banks that owe the taxpayers billions of dollars are giving themselves hundreds of millions in bonuses. Disgusting. They claim they need to do it to reatin top talent (like the talent that helped to bring us into this mess?). Really? Where else are they going to go? I don't recall my company going to the US govt for my bonus money. The rest of the world didn't get bonuses. Entitlement breeds contempt.