The human capacity to rationalize on its own behalf is enormous, as demonstrated by the ethical musings of one “Fabulous Fab” Tourre, the Goldman Sachs trader now at the center of a civil suit filed by the SEC. In an email to his girlfriend on Jan. 27, 2007, Tourre agonized about the impending collapse of the subprime market and the pain it would cause, but quickly tried to banish such thoughts from his mind:
“Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job amazing how good I am in convincing myself !!!”
But he wasn’t quite as convinced as he wanted to be. In another email, written just two days later, he confessed:
“When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invest telling yourself: “Well, what if we created a “thing,” which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?”) it sickens the heart to see it shot down in mid-flight…It’s a little like Frankenstein turning against his own inventor ”
That thing “that has no purpose, which is absolutely conceptual and highly theoretical” was of course synthetic collateralized debt obligations, or CDOs. As Tourre acknowledged, the sole purpose of synthetic CDOs was to facilitate the betting of hundreds of billions of dollars by so-called “investors” who in reality were gambling with the global economy at the Goldman Sachs casino that masqueraded as a bank.
Reading those and other emails, I couldn’t help but think of similar rationalizations by Tourre’s boss at Goldman Sachs, Lloyd Blankfein. In a profile in the Times of London last year, Blankfein described Goldman as “doing God’s work.” And when asked whether it was possible that Wall Street bankers were being paid too much money in ways that distorted the economy, he got downright indignant:
“Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.”
Blankfein, Tourre and other Goldman officials are testifying this morning before a Senate investigative committee. (You can watch it here.) That will probably be followed later in the day by another Senate vote on whether to proceed with debate and amendments to a Wall Street reform bill.
Yesterday, every Republican senator in the chamber voted against allowing the bill to proceed, effectively blocking its passage. According to Senate Minority Leader Mitch McConnell, the GOP opposes the bill because it isn’t hard enough on Wall Street, a claim that doesn’t pass the laugh test. Do you honestly believe — and I stress that word “honestly” — that Senate Republicans are waging this fight in order to tighten regulation of Wall Street?
If Republicans truly want to tighten the bill, they ought to allow debate to proceed. They would then have every opportunity to propose and debate amendments in public on the Senate floor and have those amendments voted on, again in public. If Republicans really want to tighten regulation, if Democrats really are trying to pass a sweetheart bill for Wall Street, then the GOP should be eager to have that debate on the Senate floor with the country watching.
But they aren’t. Instead, McConnell and his colleagues want the bill withdrawn back behind closed doors, where deals can be quietly cut and tough provisions can be gutted without anyone hearing the screams. And like Tourre, they have no doubt tried to convince themselves that there are “humble, noble and ethical reasons” for doing so.