“Every great general regrets the loss of even one of his soldiers,” the chief of communications for a major New York finance firm said this week. “But the loss of soldiers is inevitable.”
Wall Street’s regret for its role in the financial crisis—what contrition looks like, how it’s expressed, why it exists in the first place, and then why it doesn’t—has come to the forefront this week. That’s thanks to sorely differing performances at the Financial Crisis Inquiry Commission from two former Citigroup executives last Thursday, not to mention statements from former Federal Reserve chairman Alan Greenspan and a rare shareholder letter from Goldman Sachs the day before.
“Let me start by saying I’m sorry. I’m sorry that the financial crisis has had such a devastating impact on our country,” Chuck Prince, Citi’s former chief executive, said Thursday. “I’m sorry for the millions of people, average Americans, who have lost their homes.”
But Bob Rubin, the former chairman of the executive committee board at the same bank (where he made more than $100 million), said he did not have much control at Citi. What’s more, he said, nearly everyone else failed to foresee the crisis, too. His relative defiance, and Mr. Prince’s emotional explanation of what went wrong and how it can change, are two prototypes for how Wall Street looks at its past.
Now that the Dow closed above 11,000 for the first time in 18 months on Monday, is there a point to forcing leading executives to explain past mistakes? “And what if, after all that vitriol,” The Times’ Andrew Ross Sorkin wrote Monday, naming skeptical economists like Nouriel Roubini, Joseph Stiglitz and Times columnist Paul Krugman, who the next day explained why an apology was in order, “it turned out that taxpayers might actually lose nothing, or even make a profit? Could it be?”
The message from Wall Street, in other words: move along.
MILD SEMI-REGRET IS more common than non-apologies and passionate atonement. On the day before the Citibank testimony, Mr. Greenspan said he’d been wrong 30 percent of the time, but would not elaborate, and he opened his remarks by blaming foreign historic events, like the Berlin Wall’s fall, on where we are today.
In November, likewise, Goldman Sachs chief Lloyd Blankfein said the firm had “participated in things that were clearly wrong and we have reasons to regret and apologize for,” but did not explain what the things or the reasons were. On the morning of Mr. Greenspan’s speech, Goldman released a letter to shareholders that said the bank did not “‘bet against’ our clients.”
On Friday, the investigative newsroom ProPublica released a massive profile of Magnetar, a hedge fund that created and bet against massive bundles of subprime mortgage investments that soon became worthless. Responding to that report, the hedge fund denied that it had any intent or reason to believe that its subprime securities were built to fail.
The next day, Frank Rich’s column was headlined “No One Is to Blame for Anything.” But, to be fair, there have been dozens of apologies from financiers, just odd ones. Wall Street, after all, has become savvier since William Vanderbilt’s “the public be damned” and J.P. Morgan’s “I owe the public nothing.”
“We’ve said repeatedly that we are disappointed in our performance and that it wasn’t up to our standards,” Ed Sweeney, spokesperson for the credit-rating agency S&P, said this week. “I think, frankly, that people—I’m trying to think of the word here—ratings are only one piece of the investment-decision-making process, and the investment-research process, and that’s how we think they should be used.”
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