when giants come tumbling down

another mad rant

It’s a strange, eerie feeling, reading about the demise of two Wall Street giants, Lehman Brothers and Merrill Lynch, following soon after the federal takeover of Freddie Mac and Fannie Mae, and the earlier demise of Bear Stearns.

Perhaps what’s so striking about the recent failure of these large financial services firms is that they signal a death of a myth that I and so many other prestigious university graduates bought into.

Two or three years ago, all of us impressionable college graduates would have lusted after offers from Lehman Brothers or Merrill Lynch. A job at one of these firms would most likely guarantee entry into the country’s best law schools and business schools. A year ago, my former consulting firm, Oliver Wyman Financial Services, was still aggressively recruiting a larger incoming class for projected growth in consulting services for financial services industry. What did we really believe in? A bunch of managerial jargon about entrepreneurship, meritocracy, innovation, prestige and intelligence.

I do feel sorry for all of those analysts and associates who are now without a job, because I did tread that path for awhile. Perhaps now we can better know the price of being an “organization kid”, a lowly member in the network of the technocratic-managerial-financial elites – where more often than not, success is fleeting and power can quickly become powerlessness. Perhaps we will now know better than to trust in financial markets and lucrative job offers. And perhaps we will realize that we are ultimately responsible for our actions and decisions whether or not we are fully cognizant of their impact.

There is obviously a role for financial markets in today’s economy, and banking services are necessary to provide the liquidity needed to make today’s economy work. But I didn’t quite gain a sense from these Wall Street executives that they were trying to provide a valuable service to companies and individuals – that somehow got lost in the jumble of future trades, credit swaps, mortgage-backed securities and debt derivatives—which are somehow all subsumed under the interest of short-term profits.

I don’t particularly feel sorry for the top executives of these firms. In fact, I feel angry that though many may not have received any compensation packages, they still made their millions with timely stock sales and savings.

Who bears the true cost of these poor and risky decisions? The many who were lured into mortgages they cannot afford, those who are now watching their neighbourhoods deteriorate because of the growing number of foreclosures, and the working class who faces even more dismal job prospects. Many will feel the hurt of these far and distant decisions made in fancy boardrooms a lot harder than those who made the decisions.

(Do you feel powerless? Of late, I have been feeling that way. Powerlessness coupled with hope results in humility. Powerlessness without hope results in pragmatism.)