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Will Wall Street ever apologize?

Suzanne McGee
Suzanne McGee is a New York-based freelance financial reporter and author of the new book about Wall Street, Chasing Goldman Sachs, published by Crown Business in June.

When former White House counterterrorism adviser Richard Clarke testified to the 9/11 Commission, he used his moment in the spotlight to deliver a heartfelt mea culpa for his role in not preventing the terrorist attacks. "Your government failed you, and I failed you," he told the families of the victims. "I would ask, once all the facts are out, for your understanding and forgiveness."

Compare that to Goldman Sachs CEO Lloyd Blankfein facing the Senate Permanent Subcommittee on Investigations this April. Only weeks after the SEC sued Goldman, alleging that it had acted fraudulently by failing to disclose material facts to a client in connection with a CDO (collateralized debt obligation) transaction, Blankfein dug in his heels and refused to acknowledge that Goldman's relationships with its clients -- or counterparties, in his parlance -- were anything other than impeccable, or that the firm played any role in the financial crisis. "I heard nothing today that makes me think anything went wrong," Blankfein insisted.

That's actually a step back from Blankfein's rather feeble efforts to deliver an apology late last year. Some people, he told a forum for corporate directors last November, feel "that there's some meaningful things where may have -- not may have, certainly our industry is responsible for things. And we're a leader in our industry, and we participated in things that were clearly wrong, and we have reasons to regret and apologize for." What things? Blankfein didn't elaborate.

Perhaps success means never having to apologize coherently. But even Alan Schwartz and Jimmy Cayne of Bear Stearns and Dick Fuld of Lehman Brothers have failed to offer their clients and former employees convincing expressions of their sadness and regret that any errors led to the demise of both venerable investment banks. Meanwhile, to hear Citigroup's Bob Rubin testify to the Financial Crisis Inquiry Commission, he was simply an ordinary board member. That claim flies in the face of dozens of current and former Citigroup bankers who vividly recall him sitting in on meetings and inquiring how the bank was going to meet or exceed its quarterly earnings targets.

Just as Rubin's claims of being too far away from the action to understand the magnitude of the risks Citigroup was running struck FCIC chairman Phil Angelides as disingenuous - "You were not a garden variety board member," Angelides scolded -- so the lack of any kind of expression of regret continues to fuel populist outrage in Washington and on Main Street.

It's not surprising: even as the profits at many Wall Street firms -- Goldman Sachs among them -- have rebounded, the average American is still struggling to cope with the consequences of the financial crisis. Bankers aren't the sole culprits, but their too-glib denials of responsibility and the occasional vague and waffling expression of regret don't go far enough to deflect anger. No one expects Blankfein and his peers to commit ritual suicide to express contrition, but even some former Goldman Sachs partners wish it were possible for the firm's current leadership to lead the industry not only in generating profits but in accepting a kind of accountability.

Part of the problem is that many Wall Streeters don't believe they did anything wrong. They were following the logic of their business: to do deals and make money, in the conviction that if they backed away from a transaction, one of their rivals would swoop in and pick up the fees instead. Clients like German bank IKB, the purchaser of the Abacus securities at the heart of the SEC's fraud case, are simply "counterparties" -- grownups, sophisticated investors able to do their own due diligence when it comes to the investment they make or trades they choose to conduct. And that perception isn't too far out of sync with reality: Wall Street has no fiduciary duty to most of its clients of the kind that it has toward its shareholders.

For now, we may have to content ourselves with comments like John Mack's infamous comment last winter that more regulation may be needed on Wall Street because "we cannot control ourselves." But until the multitude of lawsuits filed by shareholders and regulators against nearly every major firm and there are resolved, an apology will be viewed by those plaintiffs as tantamount to an admission of guilt.

Still, it should be galling for Wall Street, which has long crowed about its dominance over the City, London's financial district, to realize that in the City there's at least one banker who has managed to do what no one at Goldman has managed to as yet: deliver a heartfelt apology, a la Richard Clarke.

Johnny Cameron, former head of investment banking at Royal Bank of Scotland Group, announced as part of a deal with British regulators that he had agreed never to work in the financial services industry again and that "I recognize that it is appropriate that I take my share of responsibility." Don't worry, Mr. Cameron; there's a lot more left to go around.

By Suzanne McGee

 |  June 29, 2010; 11:17 AM ET |  Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Stepping out from the ranks | Next: Lessons from a four-star resignation


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When the only "serious" people in a country are its generals, a coup d'etat becomes something many people actively desire.

Posted by: al_green | June 30, 2010 2:17 AM

". Why can't Wall Street leaders apologize and resign"

I don't know. Why can't all those running FNMA that turned a mortgage program into a welfare program and lot's of Toxic Assets that was the chief cause of the this crisis, resign?

Posted by: ekim53 | June 29, 2010 11:31 PM

Why can't Mr. Obama apologize & resign?

Posted by: igrmlnt | June 29, 2010 4:11 PM

Apparently you never made it past the third grade with your infantile remark. Why should Obama resign when he has done a remarkable job trying to save America's financial industry and the savings and pensions of us all?
Perhaps you are too uneducated and uncaring to realize that he has done well and even better than his predecessors in keeping all of us together through the worst financial crisis since the Great Depression.
He now faces the greatest ecological catastrophe ever in America and idiots like you make inane remarks.
Why don't you volunteer your to help right the wrong turns taken by greedy Wall Street bums and the corrupt military industrial complex? Maybe if you actually did something for your country instead of just making childish remarks that cause you to appear nonsensical, you'll feel better about yourself and your President. Obama has not done one thing to besmirch the Constitution of this nation. He hasn't started an illegal war and caused the wholesale slaughter of thousands of innocent human beings, he hasn't revealed the identity of a dedicate American Intelligence Officer as an act of revenge, he hasn't given the company he was CEO of every single military contract without competition, and he hasn't gathered a private army of mercenaries and paid them billions of dollars in the hope that they could alleviate the gross mismanagement and execution of the Iraq war.
There is so much you could say about those things, but you'd rather speak like a little simpleton. fritz

Posted by: papafritz571 | June 29, 2010 10:07 PM

Why is financially ruining a entire generation of Americans (with the potential of turning the next two or three into indentured serfs or cannon fodder) considered “leadership”? These vultures have no ethics, no compassion, no conscience, and no soul.

The America is fast becoming a society similar to pre-revolutionary France or Imperial Russia; will we have to use their solution?

Posted by: shadowmagician | June 29, 2010 6:31 PM

There's a code, an expectation of a certain behavior, in the military.

Nonesuch on Wall Street, unless you consider, not getting caught stealing, as a code.

And even when you do get caught, taking the savings of widows and orphans, for no other reason than, you can, there's no reason to apologize.

Acknowledgement of the inherent dishonesty of many of the transactions undertaken, would undermine the whole Street, and there's definitely an unspoken code about continuing the skim machine while unsuspecting "investors" are making their funds available for the taking.

Posted by: inono | June 29, 2010 6:04 PM

Apologize and resign when they are making $5-$50+ million a year? Not a chance any of these guys would ever give up the amazing money they are making. the financial incentive for the executives is too high to expect them to do anything but fight like hell for their jobs.

However, the shareholders of the companies they work for and who have been hurt by the misfeasance and nonfeasance of the executives should clean house and put in a much better regime.

Posted by: TL1977 | June 29, 2010 5:13 PM

While it has been revolting watching republicans wrap themselves up in the flag as we invaded Iraq and began illegal wiretapping of all american communications, and called those that opposed these things "un-american"...

when is rightful, not the jingoistic patriotism that the right is addicted to, going to manifest itself inside america's boardrooms? After wall street disintegrates? after the BP spill is stopped?

Patriotism in the business sector is an extinct notion in this GOP land of screw everyone, get yours while you can before it's gone, damned be the consequences to the country.

Posted by: jfern03 | June 29, 2010 5:09 PM

Wall Street leaders own the country while McCrystal is just hired help, at least until he becomes an executive with one of the war-profiteering defense corporations such as Halliburton and joins the country club.

Posted by: FoolontheHill1 | June 29, 2010 5:07 PM

If McCrystal didn't apologize and resign, he could very well have been court-martialed for insubordination.

As long as corporations own the lawmakers and the law, they will never have that sort of sword hanging over their head.

Posted by: bigbrother1 | June 29, 2010 4:53 PM

Many, many years ago banks 'red lined' certain areas or occupations and basically would not lend money - not in any significant amounts anyway- to people in those areas/occupations. this was born of practical experience, that the risk of not getting paid back was unacceptable.

Then along came the blue- eyed marketeers with MBA's- aided & abbetted by the equality/ant-discrimination/ social/financial inclusion industry who spotted 'unserved niche markets' & designed products to fit. If you were a meber of an excluded minority you got access to finance almost on demand regardless of whether or not you could pay it back.

Who should apologise to whom? The credit cris was a collective abberation which we are all now collectively paying for - over the next 10 yrs at least, absent any other shocks!

Posted by: aritchieni | June 29, 2010 4:45 PM

Good question.

Posted by: f16poor | June 29, 2010 4:41 PM

I agree with Mark26.

Posted by: hyperiontc | June 29, 2010 4:40 PM

Ms mcGee:

how about fannie mae and Freddie, aren't they suppose to apologize. REMEMBER, there is NO credit crisis if we did not allow people to borrow money if they were not able to pay their mortagage. The credit crisis was born out of bad government policies. right?

Posted by: mark26 | June 29, 2010 4:30 PM

Why can't Mr. Obama apologize & resign?

Posted by: igrmlnt | June 29, 2010 4:11 PM

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