The Seven Habits of Highly Effective Bankers

The Seven Habits of Highly Effective Bankers

1) Cultivate the Golden Contact List. Learn well that banking is a relationship business. Contribute mightily to your friends’ charities and good causes; work hard the golf course, the squash court, the dinner tables at the Palm and Peter Luger. Do this in the understanding that today’s partner at Goldman Sachs—or classmate at Harvard Business School—is more than likely to become tomorrow’s Secretary of the U.S. Treasury, New York State Attorney General, or a judge on the U.S. 2nd Circuit Court of Appeals. And never forget that the down-at-the-heels journalist in dire need of a pithy quote on deadline this afternoon may well turn out to be the friend you need, on spinning the announcement of a multi-billion-dollar trading loss tomorrow morning. Shrink not from these friendships and associations, for they represent the world’s oldest financial institution: the Favor Bank—that hallowed club, free from regulatory oversight, where the slick, the fleet-of-phone, and the well-connected shall always inherit the loot.

2) Fear Not the Rules or Regulators.Make friends with complexity and obfuscation; curse not the revolving door between banking and government, but see it as something to be cherished, and exploited. Understand that from insider trading to gaming Libor (the London Interbank Offered Rate), to pump-and-dump I.P.O. schemes, the so-called “rules” of modern finance apply only to the “little people,” or “someone else,” but never our Masters of the Banking Universe. Loopholes—and restated earnings—are your friend. Do not despair. For while Congress and the Securities and Exchange Commission will try their best to regulate your activities, you can take heart in the knowledge that somewhere, somehow, someone is working deep into the night to overturn their legislative theatrics, and prevent them from thwarting financial innovation, and the free flow of capital to needy people, everywhere. This is, after all, why God created lawyers, lobbyists, and political-campaign contributions.

3) Aspire to Be “Too Big to Fail.” Hundreds of financial quarters ago—when giants roamed the Earth, and the stars, the sun, and the planets all came in “above expectations”—there was an oft-cited aphorism that “if you owe the bank $10,000, the bank owns you; but if you owe the bank $10 million, you own the bank.” Clearly, today, these numbers are little more than rounding errors on a J.P. Morgan profit-and-loss sheet. But the intent remains true: If you owe the bank $100,000 on an underwater mortgage, you’re a deadbeat who must be foreclosed upon; but if you’re a bank with 260,000 employees in 60 countries losing $9 billion on credit derivatives, you own the world. Act accordingly. Pontificate endlessly. Take huge risks. Be a whale. Borrow a phrase from Goldman Sachs, and refer to your clients as Muppets. It’s all other people’s money anyway. Isn’t it?

4) Embrace the Incomprehensible. Worry not about selling your clients incomprehensible financial products like credit-default swaps or subprime mortgages that will eventually blow up and shatter the world economy like so many shards of broken sheet glass. Think of yourself as the child who kills his parents and then throws himself upon the mercy of the court because he’s an orphan. Hubris is everything. And know that at the end of the banking day, there will be an equally lucrative amount of work unraveling and unwinding all those derivatives and weapons of financial mass destruction that you didn’t fully understand, and certainly shouldn’t have sold in the first place. It’s the ultimate banking equation: Heads, I win; tails, you lose.

5) Invest in What You Know. Third homes. Family trusts. Offshore accounts. Olympic-level dressage horses. At worst, this will shelter your fortune from the vagaries of a worldwide financial meltdown. And at best, it will put you in an excellent position to run as a republican for president of the United States.

6) Establish Blame, But Never Accept Responsibility. Miraculously, the higher you rise in a banking organization, the less responsibility you will have for the misdeeds of your underlings. It’s the Jaime Dimon rule of world-class banking: Talk tough, be photogenic, and always blame someone else. In the world of “too big to fail,” you can’t possibly be responsible for everything. Or anything, for that matter. The buck always stops somewhere else—and it’s always outside the bonus pool.

7) Have Faith in the System. Take heart that in the recent history of banking, almost no one has been held criminally responsible for his financial misdeeds or malfeasance. Jim Johnson (the Godfather of the Fannie Mae debacle) currently sits on the board of Goldman Sachs; Charles Prince III (late of Citibank) sits on the board of Johnson & Johnson; Stan O’Neil (who blew up Merrill Lynch) takes solace and director’s fees at Alcoa. Remember this well: You will weather the storm. There is always a golden parachute—or some kind of bailout—at the end of the rainbow.