Wall Street has increasingly taken up its old habit of blaming junior bankers and traders for what goes wrong.
Bloomberg contributor William D. Cohan writes that this is particularly troubling because Wall Street is similar to the military: There is no upside for anyone working in finance to do anything but to follow the orders given by the bosses. The idea of a “rogue trader” is really a myth. The goal at every firm is always to make more money in any way that is legally defensible -- by selling more mortgage-backed securities, by doing bigger and bigger mergers-and-acquisition deals or by making a larger and larger bet on the direction of an obscure debt index.
When things go well - the firm lands a big underwriting or a high-profile merger or executes a profitable trade - there is no shortage of people around to claim credit. Of course, when something goes terribly wrong - see 'Whale, London' or 'Synthetic CDO, Abacus - the senior executives disappear from the scene faster than cockroaches when the light is turned on. In return, employees get paid more working on Wall Street - without putting any personal capital at risk - than they can at almost any other job on the planet. This is not a subject open to debate on Wall Street. This is the way it is. If you don’t like that bargain, you leave. (Sorry, Greg Smith.).
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William D Cohan
William D. Cohan is the author of the recently released Money and Power: How Goldman Sachs Came to Rule the World and the New York Times bestsellers House of Cards and The Last Tycoons.
Cohan is a contributing editor at Vanity Fair and writes frequently for Financial Times, Fortune, The Atlantic and The Washington Post. He worked on Wall Street as a senior mergers and acquisitions banker for 15 years. He also worked for two years at G.E. Capital. Cohan is a graduate of Duke University, Columbia University School of Journalism and Columbia University Graduate School of Business. The Last Tycoons won the 2007 Financial Times/Goldman Sachs Business Book of the Year Award.