A team of researchers at a Swiss university confirmed what much of regular society has long suspected: bankers’ behavior is more reckless and manipulative than that of psychopaths.
Thomas Noll, a study co-author and an expert in criminal justice at the University of St. Gallen, describes the results with shock. As compared to a group of psychopaths, traders “behaved more egotistically and were more willing to take risks.” Noll was especially surprised to find how ruthlessly traders pursued relative, rather than absolute, maximization of profits. “They spent a lot of energy trying to damage their opponents,” he explains, as though their neighbors had the same car “and they took after it with a baseball bat so they could look better themselves.”
But evidence of banker sociopathy isn’t difficult to find outside of controlled experiments.
Perhaps the most striking recent example is that of global banking giant HSBC. Federal investigators found that over the course of several years the bank seriously violated multiple federal banking laws, illegally disguising transactions with Sudan and Iran while laundering billions of dollars for Saudi banks linked to terrorist groups and Latin American drug cartels, among others.
In the world of finance, propping up some of the world’s bloodiest armed groups is just a profitable business move. Don’t the corpses strewn across the heartlands of Central America, the child soldiers of Sudan, the dissidents and women under the thumb of Saudi despots know anything about maximizing shareholder value?
Though tacit, the idea that vast numbers of ordinary lives can be destroyed and degraded for private profit is one deeply embedded in the financial sector.
According to World Bank figures, more than 40 million people have in recent years been pushed below the poverty line ($1.25 per day) because of rising food prices. More than a billion continue to starve worldwide. Underpinning these cruel statistics has been a boom in speculation on agricultural commodities, which rose more than 2,300 percent in volume between 2003 and 2008 alone. Researchers from the United Nations Conference on Trade and Development (UNCTAD) and others warn that the ballooning of agricultural commodities speculation has destabilized and driven food prices far from market fundamentals, effectively transferring income from those starving in the Global South to speculators in New York and Chicago.
At home, financial innovations like “interest rate swaps” built into bond deals continue to bleed our cities and states of billions needed to rebuild crumbling public infrastructure. Thomas Ferguson, a political scientist at University of Massachusetts, Boston, has written extensively on how these instruments have allowed banks to capitalize handsomely on falling interest rates while government bond issuers are left paying preposterous rates to escape the deals. The stories of the fallout are predictably brutal: hospitals, transit systems and school boards in bankruptcies engineered by Wells Fargo, Bank of America, Citigroup, Chase, Goldman Sachs, et al.
Extended over the years, these sorts of practices have crippling consequences for societies. As leading economist James Galbraith documents, deregulated finance has steadily stripped away nation-states’ public safety nets. The degree of regulation of the financial industry has grown to become a primary determinant of a society’s inequality.
Both the Tea Party and the Occupy movement highlighted public outrage against the abuses of finance, but virtually all these grievances remain unaddressed by the U.S. government. Despite overwhelming evidence that top-level, Wall Street executives routinely committed felonies (“just plain fraud” in the words of stalwart Ayn Randian, Alan Greenspan), the Obama administration’s Justice Department actively protected high-level Wall Street executives from prosecution. As PBS’s “Frontline” documents, this defied not only widespread public support for litigation, but also the expectations of bank executives themselves.
Because robbing and starving the world is not enough, banks have captured our government to ensure they are never held accountable for their sociopathy. Congressional reports show laughably plain conflicts of interest in the $4 trillion of interest-free loans distributed to banks in the wake of the crisis. CEOs and top executives at companies like GE, JP Morgan and Goldman Sachs regularly sat on Federal Reserve Boards that approved zero-interest loans to their own companies. Wouldn’t it be nice if students could do that?
Recently declassified FBI files also reveal how banks conspired with the FBI to suppress Occupy protests, collecting data on individual students at college campuses and collaboratively planning suppression efforts. Money stolen from civil society has perversely allowed banks to fund a nascent police state.
Yet at Duke, finance entraps so many of our brightest. Each year, students in suits grovel for shiny banking internships and the promise of fat, future paychecks, deluding themselves that theirs is a personal decision. It is not. Institutionalized sociopathy is not a valid or excusable career option, and it is our ethical duty to shame prospective bankers. We do not all have to be saints, but the least we can do is avoid ruthlessly destroying the world around us.
Prashanth Kamalakanthan is a Trinity junior. His column runs every other Monday. You can follow Prashanth on Twitter @pkinbrief.