In addition to reading the Matt Taibbi Goldman Sachs (GS) piece on a train this weekend, we also got around to Michael Lewis’ AIG piece. And like others, we were surprised at how little new ground he broke.
But this paragraph about the psychology of AIGFP chief Joe Cassano stuck out:
For a start, the guy who had the most invested in A.I.G. F.P. was Joe Cassano. Cassano had been paid $38 million in 2007, but left $36.75 million of that inside the firm. His financial interest in A.I.G. F.P. struck those who worked for him as secondary to his psychological investment: the firm was, by all accounts, Cassano’s sole source of self-worth, its success his lone status symbol. He wore crappy clothes, drove a crappy car, and spent all of his time at the office. He had made huge piles of money ($280 million!), but so far as anyone could tell he didn’t spend any of it. “Joe wasn’t a trader and now he wasn’t a risktaker, in his personal life,” says one of the traders. “With the money he didn’t have in the company he bought Treasury bonds.” He had no children, no obvious social ambition; his status concerns seemed limited to his place in the global financial order. He entertained a notion of himself as the street-smart guy who had triumphed over his social betters—which of course implied that he wasn’t quite sure that he had. “Joe had Goldman envy,” one trader tells me—which was strange, as Cassano’s brother and sister both worked for Goldman Sachs. “His whole life was F.P.,” another trader says. “Without F.P. he had nothing.” That was another reason, in addition to fear, that the highly educated, highly intelligent people who worked for Joe Cassano were slow to question whatever he was doing: he was the last person, they assumed, who would blow the place up.
There’s a recurring theme here that fits with other stories of the hardscrabble street smart kid with a chip on his shoulder, eager to show he’s better than all the snooty elites whom he perceives as looking down on him.
Mozilo had the exact same thing, and he even dyed his skin orange — in a psychological fit not totally different than Michael Jackson’s — as a way of separating himself even further from the WASPy bankers who dominated his mind.
This is obviously a toxic mentality in finance, because it encourages shortcuts and aggressive risk taking — not innovation, necessarily, but just straight up ballsiness.
Add in the blue collar guys at Bear Stearns, and you have a good case for sticking with the elites who have nothing to prove and everything to maintain.
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