Red Money

It used to be enough to just deliver the money.  That was all it took to be successful in business, especially the financial services business, particularly in investment banking.

But these are different times.  Back in the day, money was green; now money's turned red...as in Red America.

The New York Times ran a front-page article (reg. req'd) this morning reporting on the firing of two "senior investment bankers" at Bank of America for "violations" which in the past would have been considered business as usual.  You can read the details, but suffice it to say the two were trafficking information which  is technically private.

The article goes on to call attention to the climate in which these actions were taken.

But with regulatory scrutiny heightened after the collapse of Enron and other companies, corporations and their boards are adopting zero-tolerance policies. Increasingly, they are holding their employees to lofty standards of business and personal behavior. The result is a wave of abrupt firings as corporations move to stop perceived breaches of ethics by their employees that could result in law enforcement action or public relations disasters.

"We are in a regulatory frenzy," said Ira Lee Sorkin, a senior white-collar crime lawyer at Carter Ledyard & Milburn in Manhattan. "Corporations are acting out of fear and they don't want to take a chance that employees did something wrong under their watch, so they are basically cleaning house. Someone has to say enough."

The seemingly frantic reach for the moral high ground is driven as much by self-interest as any attempt at righteousness, now that boards and chief executives have seen how public scandals can torpedo stock prices, alienate customers and end careers.

One example of these "lofty standards" is the case of the witty young fellow pictured above.  What's his story?

Earlier this year, [Bank of America] acted in a similarly extreme fashion when it fired a highly regarded bond analyst, Andrew Susser, for his stab at humor in compiling a research report on the casino and lodging industry. On its cover, which carried the title "Checking In," Mr. Susser's face was superimposed over the body of a woman in a cocktail party dress and heels, as he was carried over the threshold by another man. There is no evidence that any client complained. Instead, the bank concluded on its own that the image was inappropriate.

Did he say, "similarly extreme fashion?"  Now, pardon me for my ignorance, but, huh?  Don't any of these people read the papers?  Didn't they see Bernie led away in cuffs?  Most importantly, didn't they hear about the election? 

The Germans have a word for "getting it": Zeitgeist.  This is literally translated as "spirit of the times," the intellectual and cultural climate of an era.  The term originates in Hegelian thought, from which the notion of the "dialectic" morphed into the now-commonplace notion of "the pendulum."

"The pendulum has swung too far," said Herbert A. Lurie, a former top investment banker...

But this way of thinking about pendulums (is it "pendula?"; too stuffy) is incorrect.  Pendulums don't swing too far.  In fact, they cannot.  Pendulums swing to the limits of their arc, in a highly predictable fashion, and then swing back again.  This is what makes them pendulums.  If you watch one for a while, you can see where it is in it's arc, and the direction in which it is traveling.  It's a relatively simple observation.

It seems to me that we are currently at a point near the end of this period in the cultural pendulum's arc, but not yet at the end.  In times like these, those who think the old rules still apply are likely to find themselves hit squarely in the forehead by the pendulum's bob.

Remember, it's no secret where the bob is going to be, so it's not OK to plead ignorance. 

But, in case you need a bit of a primer, here's one rule: Photoshop should only be used by a trained professional.

Comments

[Connie Sartain]

It seems to me that Ebers being prosecuted for fraud is wholly different from Stonecipher being axed for dating someone in the company. (Not a direct report and both available.) Those poor suckers from Bank of America had no way of knowing that the people who previousy ok'd edgy humor would suddenly nail them. The last two instances reek of "pretext" for personal vendettas in the background that tipped.

It seems the fear factor, always the determining one in corporations, is being overshadowed by its twin, hypocrisy.

As for that map, didn't you send me another version that shows how close the swing vote was in a lot of red states? I guess that will be what pulls the pend back. More concerning about the election was the blatant lying on the part of the President and his administration and the apparent acceptance of that by the electorate. Does this tell us we expect our leaders to lie, cheat murder etc. How can a government responsible for Abu Grahib and Quantanamo point the finger at anyone?

The concerning issue is the twisted definition of morality...and who is legislating it.

Well, good morning. Snarl & apology for some spelling guesses.

[Connie Sartain]

After reading the NYT article, something else occured to me (besides belaboring the obvious, twice)...backlash. There's enough hostility in the workplace, particularly about employers not living up to their moral obligations, or the implied social contract. I wonder how the peers of those fired are feeing about now. It's not as if there were a reservoir of trust to fund a breach of faith.

[Tom Guarriello]

Your point about the differences between Ebers and Stonecipher is, of course, quite valid. As for the vendetta explanation, I don't know. What I was pointing to is the backlash (pendulums swinging, lashes coming back) that's now overtaken not just business but every aspect of the culture. Moralism prevails, so we have to deal with it.

That's why the overarching frame for the election was "good" vs. "evil." A small but clear majority believed the President enough to vote for him. I tend to see the lack of WMD, Abu Grahib, and Gitmo as all blended together in people's minds as minds as "broken eggs in making omlettes," in the overarching war on evil. It's all about Zeitgeist.

[fouro]

Howdy howdy!

I'm a patterns and rythmns guy Tom, so I like the pendulum thought. But many pendulums are contained in clockboxes, and due to the *artificial* interventions of the Ebbers and Kozlowskis, Ken Lays and Tom DeLay's that pendulum's been crashing through the sides of it and smashing grandma's Lladro figurines sitting right next to it to boot.

The arc is artificial over-swing, the reaction is artificial and forced likewise. I'd say that hurries the imminent "hypocrisy" market correction along. Moral values voters? "Methinks ye doth protest to much..." All those red staters know they are riding a wave of unearned piety if higher alcohol consumption, porn purchases, divorce rates, pedophilia scandals and declining church tithes relative to blue state numbers is any indication. They too are in a bubble about to pop: Golwaterism, evolved to Moral Majority is in the death throes and like all large animals dying it's noisy and messy.

Post-industrial economy droop is what I'd say we're suffering. Our eras, "agrarian" to "Industrial" to Info to Knowledge to... are coming at us with shorter ramp up times giving us little time to readjust to the newer and deeper knowledge of an old fact: We're grubby, horny, greedy humans. I think that's shocking to people who see overnite delivery or cell phones and think "Gee, look how far we've come!" No. We haven't. We just know more, not better.

So yeah, Stonecipher is a victim of Zero tolerance. Boeing's been caught playing fast and loose (with contracts and numbers, etc) so many times lately that leaving a mess in the breakroom would probably get you fired over there.

[Tom Guarriello]

Like I said, 4, I think the time is nigh, but not yet upon us. I really like the bubble metaphor; maybe it replaces the pendulum as the new public face of the change model. Pendulums are Newtonian; bubbles, chaotic.

If that's so, then we need to look for the system perturbation, as Tom Barnett would call it, that leads to the re-gestalt. There certainly is a lot of tension building in the system given all the un-reconcilable aspects: DeLay is a walking contradiction waiting to pop, that's for sure. He has "Wilbur Mills" written all over him.

[fouro]

And I like your rationale for the new face. (We should ask Disney how to lock in our co-IP/DRM.)

The current faith twist (and cartoonish, proto-conservatism) really does have all the symptoms of the late, mass-rush to cash in. I'm reminded of the Netscape IPO launch and ensuing media head-turning like a prairie dog colony: Oooh, internets? Tech? Now that was a Rubicon...

The Passion, of last year, was the equivalent. So yeah, spotting the inflection point is key and I think you and I have seen the unwinding coming. The smart money's bolted and we now get to watch the followers (in more ways than one, huh?) get fleeced and become the crestfallen. Victims of misdirection by those holding the bullhorn. Again.

Damn, how many metaphors did I cross-pollinate in that? Ooops, did it again.

[fouro]

Okay, I can't get enough of this. Gonna have to blog "system perturbation."

[Tom Guarriello]

There is a moment when the whole superstructure of the thing becomes transparent and then, it's over. Kind of like Altamont.

Looking forward to your system perturbation blog, Fouro.