Never Having to Say You’re Sorry

“Among our disappointments has been the ratings of mortgage-backed securities issued between 2005 and 2007,” S&P president Deven Sharma told Congress in September. “Over the course of 150 years, however, our track record is something in which our people can take pride.”

“Did the company make mistakes? I’ve never used the word ‘mistake,’” Mr. Sweeney said.

The Morgan Stanley chairman John Mack stands alone as the only big Wall Street boss who has consistently said otherwise, though he stepped down this year as CEO. In a high-finance version of the famous scene from Ferris Bueller’s Day Off, there was silence from his seven peers when the House Financial Services Committee asked if there was a need for apology. “Anyone,” a committee member said. Mr. Mack responded by describing years of mistakes.
This November he pressed for more regulation. “We cannot control ourselves,” he said. “I’m behind closed doors with these people all the time,” Morgan Stanley spokesperson Jeanmarie McFadden said, “and people legitimately understand that things must change.”

JPMorgan’s chief, Jamie Dimon, even if he doesn’t have a reputation for unabashed pride, has not been as forthcoming. “We did make mistakes,” he said at the first crisis commission hearing in January, “and there were things we could have done better.”

“What should we apologize for?” the New York Post wrote the next day, quoting a Wall Street insider. “I’ll tell you this much, we do a lot more for America than Congress does.”

That hearing marked the one-year anniversary of John Thain’s departure from Merrill Lynch. When he left, he apologized for the infamous $1.2 million renovation of his office, “in the light of the world we live in today.” In a following interview, asked what was wrong with predecessor Stan O’Neal’s office, he said, “Well, his office was very different than the general décor of Merrill’s offices. It really would have been very difficult for me to use it in the form that it was in. And you know, I, it needed to be renovated no matter what.”

SOMETIMES THERE ARE no apologies at all. In the second-to-last paragraph of his recent memoir, former Treasury Secretary and Goldman chief Hank Paulson explains, “I don’t mean to minimize our troubles, but every major country has more-significant problems.”

The lobbyist Scott Talbott, a senior vice president for the Financial Services Roundtable, said that while Wall Street isn’t entirely innocent, it’s not the villain. “The basic fundamental problem occurred at the kitchen table, where the borrower got a mortgage that they couldn’t afford to repay. So if you’re fixing the system,” he said, “you’ve got to focus on the kitchen table.”

To the extent that Wall Street apologizes, with a few exceptions, it gives the sense that the crisis was caused by a regrettable combination of rivals’ incompetence, some bad judgment that’s since been remedied, a great deal of historic bad luck and gruesome governmental failures that make them look relatively blameless. Life goes on.

James Kwak, who wrote the book 13 Bankers with the former IMF chief economist Simon Johnson, said that’s part of an “intellectual cover-up.” What he means is that when Mr. Rubin or Mr. Greenspan describes the crisis as an unforeseeable natural disaster, despite the evidence to the contrary, it distracts from the man-made causes.

“There was a conscious intention to break down the regulatory system and to make sure that the banks were essentially allowed to do whatever they wanted to do, especially when it came to new products,” he said.

Barbara Kellerman, a lecturer at Harvard’s John F. Kennedy School of Government who has written about leaders’ contrition, says that what’s important about apologies are timeliness and sincerity, and what comes along with them. “Nobody begrudges the right people have to make a profit, and the more profit the better,” she said, “but in a way that’s reasonably fair and adhering to the law, and not corrupt, and not greedy to the point of nausea.”

“The issue is,” said the Wall Street firm’s chief of communications source, pointing to rivals who were more heavily leveraged, “if we were to say we were sorry, what would we say we’re sorry for?”

Never Having to Say You’re Sorry