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Sallie Krawcheck will bring Wall Street work culture to the SEC

Sallie Krawcheck of Bank of America, being shopped around DC for head of the SEC

Sallie Krawcheck of Bank of America, being shopped around DC for head of the SEC

Yesterday, I read a post by DDay on Firedoglake about how the totally uneccessary “fiscal cliff” talks are going and I felt a tiny, teensy ember of hopefulness.  But it was quickly dashed when I read in the NYTimes about how the Obama administration is considering Wall Street executive Sallie Krawcheck for the head of the Securities and Exchange Commission.

Never turn your back on the Obama administration or its backers.

It’s not just the fact that Krawcheck is a Wall Street executive who will be regulating one of the worst bunch of cheaters, liars and thieves in the history of the world. It’s more about the other things she brings to the table that the movers and shakers think are important.  For example, she is “known for her independent streak and consumer advocacy efforts”.  I don’t know what that means and the New York Times does not go into details.  Does her independence extend to not calling consumers of Wall Street products “muppets”?  I guess that would be a step in the right direction.  But something about the vagueness of this sentence reminds me of the slick, tailored dude from the major 401K management firm who I will not name who came to our site to describe all the new financial products they were rolling out.  He gave his presentation to a bunch of sciencey types but the numbers on the brochures were all based on estimates of salaries and 401K balances of the executives up the street.  Then he went on to say that these were our choices, there are no guarantees we’ll make any money from any of them, but, hey, where’re you going to go?  There’s not going to be any Social Security.  (Oh, yes, he really did say that.  I kept wondering where he was getting his information in 2009)

So, that’s the first thing that bothers me.  Making the financial products easier to understand and transparent for the consumer doesn’t get rid of their risks.  It doesn’t give you something solid and guaranteed to fall back on like Social Security.  And if everyone on Wall Street is offering products where the House is guaranteed to win no matter what but where consumers could lose everything they have because there are no company pensions anymore and we’re all shoved into 401Ks against our better judgements, then consumer advocacy means very little.  I don’t like the premise to start with that we all have to be playing at the global craps table.  Some of us want other, more secure, boring, plodding choices.  No, we really don’t care if we never own our own yacht.

But it’s more than that.  It’s Krawcheck’s crappy attitude towards work that is characteristic of Wall Street culture as described by anthropologist  Karen Ho in her book Liquidated, An Ethnography of Wall Street.  Here’s what Krawcheck had to say:

One [LinkdIn] recent dispatch, titled “What I Learned When I Got Fired (The First Time),” offered career guidance from her own rocky periods.

“If you haven’t been fired at least once, you’re not trying hard enough,” she wrote. “As the pace of change in business increases, the chances of having a placid career are receding. And if in this period of rapid change, you’re not making some notable mistakes along the way, you’re certainly not taking enough business and career chances.”

This is where she becomes completely unacceptable.  Here’s the problem: she acts like a “placid career” is a bad thing and a thing of the past.  (How does she know that?? What information does she have that we don’t? What schemes have the bankers been up to?)  Well, it might be a bad thing for people who suffer from ADHD and pernicious greed well into their adulthoods but to the rest of us out here, our placid careers are what makes us consumers in the first place.  You can’t buy anything if you don’t know where your next paycheck is coming from.  I have seen this attitude creep into the pharmaceutical research industry and ruin it.  Around 2000, many of the pharmas started employing Jack Welch management and rewards systems on the research community.  But Welch was trying to motivate salesmen.  His method doesn’t work in science.  Research people are about as far away from sales people in temperament as it is possible to get.  But suddenly, we were all supposed to act like salesmen, become super competitive and cutthroat and be prepared to lose our jobs at any moment.  You can’t do science under those circumstances.  Research takes continuity and patience and collaboration.

I’m pretty sure that science is not the only industry that doesn’t adapt well to the Wall Street work style where everyone is ready at any moment to be laid off.  It’s not practical for hundreds of millions of Americans to become instant precariats.  For one thing, many Americans live paycheck to paycheck.  Challenging the status quo and getting fired isn’t an option for them, much less getting things wrong just for the sake of shaking things up.  For another, you can’t plan for the future if you’re always worried about your present.  It’s impossible to put down roots, buy a house or even rent one, purchase a new car or computer.  You can’t have a family.  Well, you *could* have one but you’d better be prepared to not see them.  That’s what has happened to a lot of ex-pharma people.  Their families live in one state while they work in another. Think of South African diamond miners in Soweto.  And no job is secure for very long, which makes relocation a constant problem.

That’s going to have a downstream effect on homeownership, the auto industry, consumer goods.  Has it ever occurred to people on Wall Street and the people from Wall Street who are now in the upper echelons of the Obama administration that this kind of attitude towards work may be prolonging the recession??

Oh, but Wall Street people will argue that it’s the survival of the smartest.  But the science researchers out here who have lost our jobs know this is bullshit.  What Wall Street values is status, not intelligence.  Spend a few months in a lab trying to discover something that no one has ever done before.  That’s intelligence.  Or do brain surgery or rocket science or green energy science.  Or try plumbing, or modern architecture with new materials.  Or fixing some young banker hotshot’s car.  There are many different professions that require intelligence.  Computational chemists have an inkling of what Wall Street professionals do because we work with complex mathematical models all the time.  Wall Street professionals *can* be replaced- easily.  It’s not so easy to replace someone who can interpret a new protein structure.  That takes practice.

And that’s another thing that flies out of the window in Krawcheck’s world.  In an environment where you can be fired for being bold and the safety net is weak to non-existent, no one is bold.  And with each firing, there’s less time to rehearse your skills.  You’re never on the job long enough to learn anything with proficiency.  There’s some study that says that to become truly proficient in an area, you need to have spent 10,000 hours practicing it.  In Krawcheck’s world, no one gets nearly that much time before the bean counters decide to subtract positions from the bottom line.  It’s even worse than that.  During Pharmageddon, it was the salesmen in the labs who survived the job cuts, not the people who actually did the work.  And there were plenty of people with excellent performance evaluations, merit awards and inventors of billion dollar block buster drugs who were let go.  One thing we science geeks have learned from Pharmageddon is that it doesn’t matter how hard you work, how long you work, how dedicated you are to your job or any other factor that you’ve been told is crucial to your employment.  You are expendable whenever the executives need your salary to pay a shareholder or buy a new company.  The relationship between effort and reward becomes permanently broken and no amount of mean spirited insistence from the conservative Tea Party whip kissers will change that.  Kissing the whip doesn’t do you any good any more, no matter what level of education or profession you have achieved.

So, to recap, Wall Street’s idyllic work environment would result in more economic uncertainty, more stress on families, less consumer spending, less long term thinking, less expertise for businesses and a poorer, more demoralized, less motivated workforce.  It sounds like something straight out of Central America circa 1980.

It’s hard to believe that someone like Sallie Krawcheck or anyone with her attitude towards work, would seriously be considered for any governmental position during this Little Depression that was caused by so much short term thinking.  I hope that the New York Times is just trying to be provocative.  Consider me provoked.

The problem with prospective appointments like Krawcheck’s to the SEC, like Tim Geithner’s to the Treasury department, is that they bring with them a moral attitude and values system towards work and reward that is dangerous to the average American.

But the morality and values starts at the top.  I doubt that Krawcheck and Geithner would even be considered by a president who was thinking about the long term interests of the average American.  And that’s what worries me and snuffs out that little teensy ember of hope.  Obama’s actions have to match his rhetoric and just by considering someone like Krawcheck or anyone like her, the actions and rhetoric will be miles apart.

Trust no one.

Update: In a followup post at the NYTimes titled Dropping the Ball on Financial Regulation, Simon Johnson of Baseline Scenario has similar misgivings about the Obama administrations prospective appointments, particularly with respect to Sallie Krawcheck to the SEC.

25 Responses

  1. Here’s what I’ve noticed. I’ve had a small potatoes portfolio since 1990 and I’ve watched the decline of taxes on dvds and cap gains. So, what’s with this? Are dvds and cap gains more worthy than earned income? Is working for a living less worthy than “investment” income?

    Income is income and it all ought to be taxed at the same rates and FICA’d at the same rates. Work should not be denigrated or discouraged. Certainly not by an wickedly immoral tax system. (And not by any other system.) Inheritance should be taxed, fairly steeply: take some of the inherited elitism out of the system. Let’s have people expect to have to live pretty much on what they themselves earn–unless they’re frugal enough to get thru their lives on whatever amount they do inherit. Let’s be done with the lifestyles of the Dorrance heirs and their like.

  2. Great picture of Krawcheck, tho, don’t you think?

    • Mebbe but this is not a beauty contest.

      • Beauty is in the eyes of the beholder(s). The eyes that count are far removed from us.

        • I’m pretty sure she’s not going to be hired for her good looks. And if she is, then we have a dumber set of elected officials than I thought we did.
          Simon Johnson recommends Neil Barofsky or Gary Gensler for SEC. I’d go along with that. Barofsky’s seen the bad side of Treasury and TARP from the inside. Gensler has been running the CFTC and was once an advisor to Hillary Clinton. I think it was Gensler who had a heads up on the Corzine MF Global thing and the LIBOR scandal, which seems to have disappeared from the news.
          Neither Barofsky or Gensler is pin-up material.

          • Beauty is in the eyes of the beholder(s). The eyes that count are far removed from us.

          • And if I were Sallie Krawcheck, I’d be extremely offended by that criteria. The Obama administration already has a gigantic problem not taking women seriously. But in any case, I find her unacceptable. The thing of beauty that the White House is looking for is whether she’ll pacify the bankers.

          • Exactly.

  3. That “no SS for you anyway” remark by that grubby little 401k hustler may have been basic ideology. Many years ago, back in latest 1990s,
    I attended a big presentation about TIAA-CREF alternatives and stuff for our 403b’s here at the U of M. One of the presenters, a semi-elderly grandfatherly-looking gentleman, referred to Social Security as a game of “3 card monte”. In the informal gatheround after, I backed him somewhat down on that point.

    And he was nowhere near as bad as the bright young hustler in the back of the room from Fidelity who was touting Fidelity’s 401ks to us future retiree wannabes.

    The question for young-ish people who actually HAVE jobs going forward is if the 401ks being offered at their workplace are voluntary or mandatory? If they are voluntary, one hopes the young-ish people at work consider withholding their money from the 401k trap and targetting it to debt zero-out, home-purchase pre-payment paydown to zero, building up their physical health to the highest possible level, etc. etc.

    • And here the 3 card monte turned out to be the stock market. I’m shocked, SHOCKED! Just as real estate only goes up, they’re(whoever they are) not making more of it, etc……… Right off the bat, whoever they are are making and unmaking real estate all the time. That’s how the earth works, as they know very well. They are smart, they are. I don’t think they’re in the market, too flibbertigibbet. They take the long view.

  4. Look! It’s Betty Crocker!

  5. This ” trial balloon ” suggests that Wall Street still controls economic policy in the White House. ( Not that it was ever in real doubt ). It’s a culture of risk-taking, recklessness, and mindless pursuit of short term profit- the public interest be damned. All Obama supporters should keep a close watch on events. There may be a bit of an exhale with the defeat of Romney, but this President won’t bat an eye to sell out the wishes of his constituency. He’s already proven that.

    As for Ms Krawcheck, she puts a better face on Wall Street greed, but someone like Neil Barofsky would be a much better SEC Commissioner, because he would take seriously his role policing the excesses of the financial industry. This, of course, makes his nomination unlikely.

    Her views on work smack of the hypocrisy of the elite class. Workers, she says, should take career risks, but how do you take risk without an adequate safety net? Her colleagues make enough money and have enough connections to deal with a career derailment. Most Americans have no such support. Loss of a job means no health care, diminished prospects for retirement and reduced earnings prospects—permanently. Unlike the Wall Street MOTU, you and I can’t petition the government for a bailout when things blow up.

    • Whatever happened to the “Democrats for Hillary” of 2008? I thought they were all going to come out and vote their vengeance against Obama one way or another. Did they all do that? Was it “still not enough”?

      I remember predicting that the “R@yce Card” vote would go for Obama by 95% or better. I just recently read that 93% of it went for Obama. So I was off by 2%, which isn’t bad.

      Whatever happened to Wellstone’s “Democratic wing of the Democratic Party”? Did they mis-apply the lessons of (Nader)Bush versus Gore this time around? (Nader)Bush really was different from Gore which is why I voted for Gore. But was Romney any different than Obama? The only difference I could see is that Romney carried a bunch of neoconservative foreign policy scum with him, whereas Obama had some more of what are called “realists”. And Romney couldn’t even be bothered to lie smoothly and artfully the way Obama does.

      The Obama voters are clearly cultists in the mold of Reverend Sun Yung Moon’s followers. They are entirely beneath “keeping a close watch on events”. That close watch on events will have to come from somebody other than the Obama voters, because they have proven themselves too “intellectually challenged” to be able to provide a “close watch” on anything at all.

      If only there were a way for all the Obama voters to lose their Social Security, their Medicare, their Medicaide, and their houses . . . the way they voted to . . . while the rest of us could keep ours. But life doesn’t work that way.

      • First off, I don’t think Hillary will run in 2016. Second, I do think Biden will. He said recently, “See you in 2016,” and he was taken to mean the presidential primary. I am not voting for the senator from MBNA. Just for the record. By Washington standards, low as they are–different “they” than above–Biden might not be a really, really bad person, but he’s more old fart, stale, past his sell-by date. We need new ideas, new people, a clean sweep at the top: they’re going thru the motions, by rote, and they haven’t a clue. Their engine is a monomaniacal devotion to their positions and powers and that’s all they bring to the party. It’s the ultimate extractive industry.

        • He is joyfully associated with the Simpson-Obama Catfood Conspiracy against our survival benefits and against every other aspect of our survival. That is the record he would be running on.

          “Did you love TARP? Did you love letting all the FIRE sector criminals get off scot-free? Did you love the enshrinement of a “no law zone” for the massive ongoing multi-million-dollar house land-grab against millions of homedwellers? Do you love Baucus-Obama Romneycare?
          Do you love the Simpson-Obama Catfood Plan for Social Security? Well, have I got an offer for you! Four MORE Years of More of the Same! And if you are all GOOD little boys and girls, four MORE more years AFter THAT!”

          I don’t think the Repuglans could get me to vote for Biden even if they ran a combo ticket of Newt Gingrich and
          Governor Huckabee.

          • Oh, I’d love to see that ego battle, selfless and humble before God as neither of them is.

  6. Moderator: If this is too long ot to cuty pastie – sorry.
    This day in history – 12-2-1859:

    “The sheriff cut the rope with a single blow; there was a crash as the platform fell and Brown dropped through. A spectator recalled, “There was very little motion of his person for several moments, and soon the wind blew his lifeless body to and fro.”

    The Browns believed that the devout had to bear witness against the sins of the nation. And there was no greater sin, they said, than the institution of slavery. So Brown’s father turned the family home in northeast Ohio into a stop on the Underground Railroad. And he turned his son into an ardent abolitionist.

    Despite his contributions to the antislavery cause, Brown did not emerge as a figure of major significance until 1855 after he followed five of his sons to the Kansas territory.

    [Lawrence was established in 1854 by anti-slavery settlers, many with the help of the New England Emigrant Aid Company, and soon became the center of pro-slavery violence in Kansas Territory.]

    There, he became the leader of antislavery guerillas and fought a proslavery attack against the antislavery town of Lawrence. The following year, in retribution for another attack, Brown went to a proslavery town and brutally killed five of its settlers. Brown and his sons would continue to fight in the territory and in Missouri for the rest of the year.

    Brown returned to the east and began to think more seriously about his plan for a war in Virginia against slavery. He sought money to fund an “army” he would lead. On October 16, 1859, he set his plan to action when he and 21 other men — 5 blacks and 16 whites — raided the federal arsenal at Harpers Ferry.

    Brown was wounded and quickly captured, and moved to Charlestown, Virginia, where he was tried and convicted of treason, Before hearing his sentence, Brown was allowed make an address to the court.

    . . . I believe to have interfered as I have done, . . . in behalf of His despised poor, was not wrong, but right. Now, if it be deemed necessary that I should forfeit my life for the furtherance of the ends of justice, and mingle my blood further with the blood of my children, and with the blood of millions in this slave country whose rights are disregarded by wicked, cruel, and unjust enactments, I submit: so let it be done.”

    H.D. Thoreau on John Brown

    “When we heard at first that he was dead, one of my townsmen observed that “he died as the fool dieth;” which, pardon me, for an instant suggested a likeness in him dying to my neighbor living. Others, craven-hearted, said disparagingly, that “he threw his life away,” because he resisted the government. Which way have they thrown their lives, pray?”

    As the bankers exert their political control in countries around the world? Is it hyperbole to equate these times and the ills we face with the story of John Brown?


    “Now, Austerity threatens the people of Europe and America, as well as the people of developing countries.

    In the worldwide economy without borders, Austerity is the new slavery.”

    – John Hayden



  7. Now that I have time to think about Rangoon78’s post at a little more leisure . . . on my lunch break . . . I would say that it isn’t Austerity which is the new slavery. It is Free Trade which is the new slavery. Austerity is one of Free Trade’s consequences . . . just as whippings and sale of one’s children and etc. were some of slavery’s consequences.

    Separately and totally unrelatedly . . . I just had another demonstration that “organic” is no guarantee of quality where food is concerned. I needed a pepper for my lunch and I only had time to get to the legacy hippie food store. They had some Organic peppers the size of small canteloupe melons . . . which was a bad sign right there . . . but I really needed a pepper. So I bought one. Three bites into it reveals it to be really too awful to bother eating. It has NO taste. It does not even deserve to be called “pepper”. It is a certified Organic ugly-bag-of-mostly-water. The conventional greenhouse hydroponic peppers from Canada or Holland are sooooo much better. I say that as an uncredentialed foodie.

    • I can’t usually tell organic from non but I must say I prefer organic bananas, lighter in taste and texture.

    • You are right on size. The small peppers we grow in a small vegetable patch (tomato, pepper, garlic) have as much taste in them as the much larger super market bell peppers (green, red, or yellow). No hot, just flavorful. More taste in a smaller pepper means more taste per bite and it also means that one pepper is one pepper as far as the recipes go.

      Theoretically, free trade should auto correct for some of its obvious flaws except that the theory is junk. Central banks and governments artificially control the prices of currency so instead of Greek made goods being cheaper to eventually pay for their imports and loans, we get a fixed Euro and austerity/25% unemployment/a crippled economy and a further round of austerity to come.

      I have been told by someone dealing with a factory in rural China that they consider the cost of labor in making a jacket to be zero. That’s right, zero. The cost of the buttons, the thread, and the cloth were important but the human cost was so insignificant it was considered to be zilch.

      Interestingly, two people I know whose apparel manufacture was moved to China wound up losing their business or (in the other case) employment because the Chinese muscled out the US based middle man and just dealt directly with the stores.

      “Free trade” with its current parameters is a race to the bottom, rewarding those with no limits on hours, low pay, no benefits.

  8. What’s with the arms back in that picture? It pushes her boobs forward and makes her look like she’s posing for cheesecake pic in a business suit.

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