Dorothy Rowe

Jamie Dimon did admit, 'We could have done better,' but against that the inquiry should put the fact that 'JPMorgan never posted a quarterly loss.' Moreover, his firm's virtue was saint like. He explained, 'Over the weekend of March 15, 2008, the federal government asked us to assist in preventing Bear Stearns from going bankrupt before the opening of the Asian markets on Monday morning. To a man, our Board of Directors felt JPMorgan Chase had a special obligation to do all we could to help, especially knowing that we were among the few companies in a position to do so.' Dimon here is demonstrating the art of being virtuous while sticking the knife in your competition. Dimon had to confess to what everyone knew, that their Board of Directors had asked for and got $30 billion from the government for this charitable act, but Dimon dressed up this confession in the language school children use when they want to turn the teachers' language against the teachers. Dimon explained that they had asked the government for this money, 'As we believed that it would have been irresponsible for us to take on the full risk of all those assets at that time.' 'See how responsible we are, miss.'

And of course, responsible school children are an example to others. Dimon said, 'JPMorgan Chase did not ask for, nor did we need, a capital infusion from the federal government. . . However, federal officials asked us to set an example for others by accepting TARP funds as a sign of support for the government's actions to strengthen the economy.' Dimon confidently and complacently declared that a financial crisis is something that 'happens every five to seven years. We shouldn't be surprised.' If a financial crisis occurs like an earthquake every four or five years, surely sensible people would do what they could to prevent it, or at least to mitigate its effects?

Lloyd Blankfein tried to bore the Commission into silence with a lecture on Goldman Sachs business model which, he said, 'would contribute to the Commission's work to understand the causes of the financial crisis.' He had a warning for the FCIC: 'There is a natural and appropriate desire for wholesale reform. We should resist such a response, however, that is designed around protecting us from the 100-year storm.' During questioning by Angelides, Chairman of the FCIC, Blankfein referred to aspects of the financial crisis to a 'hurricane' and similar acts of God. Angelides rebuked him with, 'Acts of God we'll exempt. These were acts of men and women.' Writing about the inquiry, James Quinn of the Telegraph said, ''For Blankfein, who endured the bulk of the tough questions from Phil Angelides, critics said it was as if the last 24 months never happened. First he blamed ignorance: "We did not know what was going to happen at any minute," he said. And then he blamed others: "It was a failure of risk-management of a colossal proportion," he said, in relation to the near-collapse of AIG.'

Brian Moynihan preferred to avoid all mention of how close the Bank of America came to bankruptcy and chose instead the virtue of being helpful. The danger of being helpful is that it is so easy to seem to be patronising. He opened his testimony with, 'Now is an excellent time to discuss the history of the recent financial and economic crisis, as time has given us some perspective, and Congress has yet to enact legislation.' You might feel that patronising others demonstrates your superiority, but you forget that it always makes people dislike you.

John Mack, whose bank would have failed had not the government come to its rescue, was also 'pleased to help you with this important task.' He said, 'We at Morgan Stanley believe the financial crisis exposed fundamental flaws in our financial system. In retrospect, many firms were too highly leveraged, took on too much risk and did not have sufficient resources to manage those risks effectively in a rapidly changing environment. The financial crisis also made it clear that regulators simply didn't have to visibility, tools or authority to protect the stability of the financial system as a whole.' That is, other people were as bad as or worse than we were.

Though they each spoke at length, and answered questions, one thing was missing from all they said. A real apology. It is easy to trot out an appearance of an apology with a version of, 'I'm sorry you're upset.' To make a real apology we have to state precisely what was the nature of the injury that we have inflicted on the person we are apologising to, and then say how contrite we are. The bankers were incapable of apologising because they seemed not to understand that they had inflicted grave injuries on a vast number of people. In the popular media phrase, they just didn't get it.

Paul Krugman of the New York Times summarised the grave injuries the USA had suffer. 'Consider what has happened to far: The US economy is still grappling with the consequences of the worst financial crisis since the Great Depression; trillions of dollars of potential income have been lost; the lives of millions have been damaged, in some cases irreparably, by mass unemployment; millions more have seen their savings wiped out; hundreds of thousands, perhaps millions, will lose essential health care because of a combination of job losses and draconian cut-backs by cash-strapped state governments.' Add to this what people had suffered all around the world.

Krugman concluded that, 'The bankers' testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that's important: it tells us that, as Congress and the administration try to reform the financial system, they should ignore the advice from the supposed wise men of Wall St, who have no wisdom at all.'

The testimonies by these bankers illustrate what Nassim Taleb said in his book Fooled by Randomness, 'Nobody accepts randomness in his own success, only in his failure.' The size of the bonuses these bankers pay themselves shows that they see their success as as result of their own ability, while they see their failures as being accidental or caused by other people. Their inability to comprehend that our success can easily be a result of chance, while our failures are all too often our own fault, suggests that these men have little understanding of themselves or of other people.

The paradox with which we all have to live is that, while we are social animals needing other people in order to survive, the way our brain functions means that we each live in our own world of meaning. Some of our ideas are likely to be similar to the ideas of other people in our community, but the ideas held by people in communities very different from our own can so radically different from our ideas that, if we should encounter them, we have difficulty in comprehending them. It is so much safer to live just within our own community, but, even then, certain ideas that our family, friends or colleagues hold can threaten our vanity, destroy our dearly held theories and undermine our sense of security. Rather than explore the ideas that challenge their own, many people prefer to adopt the view that, 'Anyone who doesn't think like me is either mad or bad.' In refusing to examine their own and other people's ideas, they never learn how to understand themselves and other people. This is a dangerous way to live because your ignorance puts you at the mercy of events, especially events associated with other people's feelings and your own. Clearly these bankers do not comprehend the degree of other people's anger and hatred of bankers and all they represent.

If you have failed to learn how to understand yourself and other people, the only way to create some sort of safety for yourself is to live in a small community where most of the people think and act in ways that you can to some degree predict. Gillian Tett in her book Fools' Gold called the communities within the business world 'silos' after the windowless cylinders where grain is stored. These four bankers here lived in such a silo, a rich, comfortable and powerful silo, but a silo nevertheless. They guarded their silos jealously and would not let just anyone in.

Ambition alone will not secure anyone a banker's job in Wall Street, nor will ability. You need to have gone to the right school, the right university, and have connections to the right people. Larry McDonald might have secured such a job had not his parents' disastrous marriage and divorce interrupted his schooling, so that the university that admitted him was not Harvard but the University of Massachusetts at Dartmouth.

McDonald called the first chapter of his book about the collapse of Lehman Brothers 'A Rocky Road to Wall Street'. Here he told the story of how hard he worked and studied, and how he used what connections he had to reach his goal to become a trader in one of the most exclusive silos on Wall Street, Lehman Brothers. He was there for the final years of the bank's existence. He summarised the reasons for its fall in the title of his book A Colossal Failure of Common Sense. In this he explained why it had been so difficult for him to get to Wall Street. 'By the time I had graduated from college in 1989, I had learned enough about Wall Street to understand that that was the place I wanted to be, right out there in New York with the big dogs, playing in the major leagues of finance. The trouble was, my chances of getting there were ziltch. Those big firms recruit from the best colleges in the United States. They ransack the top business schools, scoop up the outstanding talent from Harvard, Princeton, Yale and Penn. And they land them early, often bringing kids into the firms for work experience before they even graduate. UMass Dartmouth was not one of the regular stops on their recruitment drives. They wanted the best, and their recruiters headed straight for the institutions where they were most likely to find it.' 'The best' come from families who could afford to send their children to the most prestigious schools and colleges.

With Lehman's fall a new phrase entered the public discourse, 'banks that were too big to fail.' That is, the government could not afford to let these banks fail, no matter how incompetent the management of these banks were. Saving these banks cost tax payers trillions. Not surprisingly, there were soon many demands that the banking system should be more intensively regulated. The banks and their political supporters responded with threats about what would happen if anyone tried to stop what they were doing. It was clear that President Obama was in a quandary about what to do, and, as time passed, it seemed that he and his Treasury Secretary Timothy Geithner would eventually do very little. When the Republican Scott Brown won Ted Kennedy's old seat in the Senate, all the talk was about whether Obama would ever get him health care bill through the Senate. Obama and the Democrats were reported to be in some disarray and were in the process of re-grouping.

Then a rumour, soon confirmed, that Obama was to make a statement about banking sent shares into a decline. When Obama appeared standing beside him was not Geithner but Paul Vockler, who had been Chairman of the Federal Reserve under both Carter and Reagan and was now Chairman of Obama's Economic Recovery Advisory Board. Vockler had been calling for tougher action against against banks. Now Obama announced that he was going to do that. His plan was 'to prevent banks that take retail deposits from running their own trading accounts or operating in-house hedge funds and private equity arms.' 'This,' wrote Larry Elliott of the Guardian, 'will face strong opposition from Wall Street and its many supporters on Capital Hill.' He went on,

'Politically, the relationship between Wall Street and Washington has become a lot too cosy, a revolving door policy in which investment bankers like Robert Rubin and Henry Paulson - who both came from Goldman Sachs - are appointed treasury secretary.

But there has always been a different tradition in American politics, going back to Thomas Jefferson's battles with Alexander Hamilton in the 1790s, which is deeply suspicious of the power of the big banks. Roosevelt tapped into that populism when he used his inauguration speech in 1933 to lambast the money changers who had fled from "their high seats in the temple of our civilisation".

Obama provided an echo of that New Deal era when he talked of a "binge of irresponsibility." Wall Street did not see the attack coming and it hurt.'

Having an accurate understanding other people has more advantages than simply being able to be empathetic and kind. If you have an accurate understanding other people, including the people who do not live in your silo, you are able to know who your enemies are, and what they are likely to do to hurt you well before they do it.