How to Self-Destruct: financial sector style

When I was at Wharton, my chief complaint about Wall Street was that financial intermediaries (brokers, i-bankers, fund managers, etc.) were paying themselves as value creators when their chief functions were either administrative, intermediary, or  compliance. They didn’t make anything, they simply put buyers and sellers together. Sometimes they had to restructure a company’s books to enable the transaction. OK, I asked, how is that different from a network admin who has to reformat a database before an upgrade?

Then I asked a really unpopular question: why would clients pay their fees? I never thought that the poor slobs who built the companies paying their fees were as stoopid as the bankers suspected. In the time I’ve spent since leaving college, the conclusion I’ve come to is that (1) business owners simply lack the financial awareness to ask the right questions, and (2) by the time an i-bank/venture fund/<insert other type of financier here> is involved, there is generally so much time pressure that no one has time to care.

Needless to say, I was not always popular in my classes. I didn’t (and don’t) agree that “because these are the market rates” offers a sufficient justification for pricing when buyers lack transparency and clarity about the services they are buying. In fact, I sat through entire semesters of economics classes about how capitalism FAILS under certain conditions, including those in which a few control a resource necessary to the many. This is called an oligopoly.

(For the record, I know a number of people in the financial sector. Some of them are good people. Some of them work hard. And then, some of them are total lass wholes who wouldn’t know a “risk” if it banged them on the head with a hammer… the kind of people who are shocked when they go to an ATM to find that their money is the same color as everyone else’s.)

Fast forward 13 years. Banks start failing, and I’m thinking: “pay yourself outsized returns, expect outsized losses.” You guys had a helluva ride up… but as any statistician can tell you, over the long haul, all trends regress to the mean. Which—in English—means that the pendulum eventually swings back the other way, and it swings as far in the other direction as you pulled it in your direction.

But then I see something that just stops me in my tracks. Like how the former chairman of NASDAQ lost $17 $50 billion of investors’ money running a Ponzi scheme.

I’m having trouble fathoming this one. Arrogance? Greed? Not strong enough. Hubris? I dunno. Maybe.

I’m not a proletariat guy. I’m not the one who bangs the drum for the unions; I don’t believe in a system that institutionalizes featherbedding and from what I’ve seen, many union leaders lack the sophistication to know how to negotiate effectively. But you know what else I’m not? I’m not a thief.

The worth of a man is not measured in dollars. I see no reason why the punishment for this type of crime shouldn’t be commensurately harsher than theft. If stealing $17 gets you a day behind bars, then I think maybe this guy should go away for 17 billion days.

Remember, I’m not a lover of labor, so don’t take what I say here as an endorsement for the other side. It’s not.

It’s an endorsement for humanity, and my way of saying that I hope, whatever our economic system looks like when this mess is over, that human nature has evolved enough by then so that I never have to read another headline like this again… ever.

Jason Seiden is Co-founder and CEO of Ajax Social Media, a training company that shows professionals how use social media to work more effectively.