I was watching Ozark this week, which if you don’t know, it is a show on Netflix about a financial advisor who launders money for the cartel. Later in one scene, he is transferring money from a new client to his account, and they show his screen:
Now as any monkey on here should know, there is a big difference between being a financial advisor and investment banking, but to the average Netflix viewer, they’re the same. A few weeks ago, my younger brother (who wants to be a doctor) and I were talking, and he said something along the lines of: “I will actually contribute to society being a doctor rather than an investment banker.” When I asked him to name one service or activity that investment bankers perform, what he described was what he has seen from “Wolf of Wall Street” not capital raising, underwriting, or advising companies on acquisitions.
What is obvious is Investment Banking has a big PR problem. The general public has no clue of the role of an investment bank. What can be done about this? I see occasionally on YouTube Goldman Sachs has ads about different companies they’ve helped raise capital and thus expand their business. Stephens Inc. had been promoting this is Capitalism with the goal of:
Introducing a collection of stories of great American capitalists who embody the values of independence, innovation, and dedication. They inspire us to celebrate capitalism, its inherent social contract, and the good it can do for our society.
It explores and shares the stories of Helena Rubinstein, Jack Stephens, Alexander Hamilton, Madam C. J. Walker, Chuck Williams, and Sam Walton showing the power of capitalism. For those that don’t know, Stephens Inc. was the co-lead underwriter in Wal-Mart’s IPO in 1970 over many banks, including Goldman Sachs and Merrill Lynch. This series focuses on promoting Capitalism, not Investment Banking, but is a step in the right direction of sharing the positives of free-markets and capitalism.
Alan Lee started “The Vampire Squid” podcast when he was an analyst at GS in SF with the goal of increasing education and transparency in finance, as he states at the start of every episode. The name of the podcast comes from Goldman being called a vampire squid after the 2008 crisis because it was viewed as sucking money out of the economy. An actual vampire squid gets its name because it looks like a vampire, and Lee found it ironic that Goldman also only looks like it sucks money out of the economy, just like the squid.
So Monkeys, Investment Banking has a huge PR problem, and multiple companies and people are trying to help, but it doesn’t seem to. This obviously doesn’t discourage me or most of you from striving to break into the industry, but what do you think it will take to improve the industry’s reputation? I think it is a much larger cultural problem of demonizing the rich and successful, and investment banking is the ultimate icon of wealth and success, whether or not it should be. Love to hear your thoughts monkeys.
Nothing will ever change public resentment for banks:
1 . People have hated banks since the dawn of man (see Biblical references to usury, etc.). They are dumb and irresponsible and look to banks to borrow, then resent the interest payments and if they do default they resent the banks for trying to collect. IB is lumped in with these much maligned consumer units.
2 . People resent those who make a ton of money. Especially people whose job only involves money, and doesn't involve the creation of tangible products.
People are dumb and uninformed. They don't understand banking, and most never will. Try explaining to some idiot on the street how investment banks value companies. Good luck. They won't understand the value-add, and therefore they assume that from 1 and 2, bankers are just greedy usurers taking advantage of people who actually make shit.
People don't understand moral hazard and don't understand Government failure or how perverse government incentives have created almost every major asset bubble and subsequent collapse in American history. They blame the banks for the crises, and when they remember the recessions, they think of bankers. When they think of bankers, they remember the recession.
A lot of bankers are assholes. I say this as someone who loves the industry and the people in it, and grew up in a family of bankers. But seriously, there are some massive assholes who have given wall street a bad name. Given all the stuff above, it's hard for a cab driver to empathize with the guy walking around in a $2000 suit having an aneurysm because he's late to work.
But who cares? I am not dedicating my career to banking for broad public love and adoration. I think the work is meaningful, and plenty of smart and informed people know the truth and understand the value that properly functioning markets and access to credit create for society. WITHOUT BANKING, THERE WOULD BE NO INNOVATION AND NO ECONOMY TO SPEAK OF. I know this, and most people in industry know this. That's enough. And oh yeah, the pay is pretty good.
Peel back the curtain a little bit, and the average doctor (M.D.) doesn't exactly do amazing shit, specialists and surgeons aside. Most are just doing guesswork in a white coat, treating symptoms by writing the same old scripts for big pharma, who bankrolls the AMA, who decides what they learn in med school.
Writing Z-packs, formatting pitch books... po-tay-to/po-tah-to.
Hell, I'd argue an Analyst in a top healthcare-centric shop adds more value to society than an average doc, via facilitation of capital flows -> innovation/increases in R&D.
I work in finance, but you're stupid if you can't pickup on
1.) Too big to fail is a problem. There should have been no bailout in 2008. Natural selection... only the best risk managers deserve to survive.
2.) Traders should be responsible for their losses personally. Remove asymmetries and make sure everyone has skin in the game.
"The only reason that they all get to continue living like kings is cause we got our fingers on the scales in their favor. I take my hand off and then the whole world gets really fuckin' fair really fuckin' quickly and nobody actually wants that."
You wanna be demonized? Try working with structured products... Once the Big Short came out and everyone thought they knew everything, I even had my parents friends making snide comments to me claiming ludicrous things against me personally, and working at a HF of all places analyzing these didn't help. First, im 25 so talking shit to me like its my fault is just laughable. Second, while the CDO squared, loose underwriting standarss and the insane amount of CDS on the market of course was a problem, not one of them ever stopped to consider that maybe it was the government who mandated mortgages be made available, or the people who openly and willingly went way beyond their means and didn't attempt to learn anything about what they were buying into. They will always shift blame to anyone but themselves, but I think everyone in banking knows and understands all parties were at fault.
Let's be honest, were easy targets. They see us as greedy and manipulative, making money by pushing paper. They believe thevsystem could easily be scrapped and everything would be okay in the world. We know how much work and dedication goes into it, and all of us find the work extremely interesting. We learn how the world is intertwined and see things in a different light, and we feel a sense of pride in what we do. I don't see it as smug or arrogant, but something I'm proud of. They'll be jealous and shift blame of all the world's problems to us, and there's nothing we can honestly do to change the mentality. But well continue to do our thing and work hard because it's who we are
"People wanna live like this in their cars and big fuckin' houses they can't even pay for, then you're necessary. The only reason that they all get to continue living like kings is cause we got our fingers on the scales in their favor. I take my hand off and then the whole world gets really fuckin' fair really fuckin' quickly and nobody actually wants that. They say they do but they don't. They want what we have to give them but they also wanna, you know, play innocent and pretend they have no idea where it came from. Well, thats more hypocrisy than I'm willing to swallow, so fuck em. Fuck normal people." - Will Emerson, Margin Call.
I think this quote sums up nicely.