Vibrant Banksters

Steve Sailer posted an interesting except from a book written by a former Lehman Bros. executive regarding the way diversity was forced down the throats of employees at that firm- right around the time that the housing bubble was clearly becoming a huge problem:
One of these was our corporate president, Joe Gregory, the right-hand man of the reclusive CEO, Dick Fuld. ... But Joe Gregory was a regular, run-of-the-mill, ho-hum financial sycophant, devoted to his master, Richard Fuld, ... Joe’s fixation was a subject called diversity. He was consumed with it. His aim was the mission of inclusion. He had an entire department devoted to it, headed up by a managing director. Great rallies were staged in New York’s auditoriums, with free cocktails and hors d’oeuvres served for up to six hundred people, all listening to Joe or one of his henchmen pontificating. “Inclusion! That must be our aim!” he would yell, as if we were running a friggin’ prayer meeting. ... Which was all very well, but down in the trenches, where a trader might sweat blood to make a couple of million dollars, most of us were a bit tetchy about Joe Gregory going off and spending it on a cocktail party for six hundred people. 
... Especially when it emerged that the top dog in diversity was earning well over $2 million a year and that the diversity division had a bigger budget and more people than risk management! 
Joe’s mission for diversity drove [Christine Daley, head of distressed-debt research] mad. She had no time for any of it, but Joe Gregory had us all over a barrel: he had major control over our bonus compensation, and he made it clear there would be extra money for those who rallied to his cause. Most of us did not care about the cause, but the prospect of this thirty-first-floor sycophant lopping a couple of hundred thousand off our annual check because we weren’t in there pitching for the cause of the day was seriously irritating. Harsher judges than I considered Joe hid behind his unusual fixation, appearing to fight the world’s woes while staying well clear of the gundeck. 
Christine’s view of the market was it was behaving irrationally and almost certainly showing classic signs of a top, with dozens of corporations trading at values far, far beyond reality. She also believed that when the president of a trading investment bank was spending his time staging hugely expensive rallies for minority groups, that might have been the ultimate demonstration of a market peak. There was too much undeserved cash flying around, it was all too easy, and there was too much time to find oddball ways to spend it.

Vox further notes that "the Bush administration's pathological fixation on expanding homeownership among Hispanics played a contributing role in blowing the housing bubble". He's not at all wrong about this.

My own perspective on the subject is a bit different from Vox's, mostly because unlike him, I have worked (and still work as of this writing) in the banking industry. (I will even go so far as to disclose that I have worked alongside many ex-Lehmanites, in the same building that was once Lehman's global headquarters, though this was well after Lehman's actual bankruptcy.) My conclusions are roughly the same.

Diversity of all kinds is an article of faith amongst major Wall Street firms these days. It isn't quite so bad among middle office, operations, and IT staff, because these organisations recognise that the jobs that they do are critical to the functioning of any decent bank and cannot wait on political correctness. This is partly why banks have been able to get away with outsourcing vast amounts of their infrastructure. And it's still not quite so bad on the trading desks- there are very good reasons, which have everything to do with biology and aptitude and nothing whatsoever to do with political correctness, as to why trading desks are such male-heavy environments. There are very good reasons why the finance teams are largely female- and why the middle office teams, at least the good ones, are overwhelmingly male. After all, someone has to waste time doing PowerPoint presentations while guys like me are programming scripts and building spreadsheet pricers...

In higher levels of management, however, the diversity creed is endemic. I remember very clearly sitting in town hall meetings at my previous firm and having to listen to same vapid woman ask an almost all-male, all-white panel of very senior characters within the bank's organisation about plans for diversity and inclusion. To a man, you could see the panel almost imperceptibly cringe before a C-suite executive responded with some very sincere-sounding waffle about how the firm was "more committed than ever" to hiring the right talent for a diverse and inclusive workforce.

A workforce that emphasises "diversity" over actually getting things done and accurately managing risks will inevitably trip over itself. Lehman most assuredly did. So have other firms far outside the financial sector- I have good reason to believe that a certain giant pharma/medical/consumer company was led astray in no small part because quality control procedures implemented by most operating units within the company were ignored, quite blatantly, by the very units that have gotten that company into trouble, and those decisions were signed off by a "diverse" board of senior managers within that organisation.

There are some benefits to diversity- provided we are talking diversity of thinking rather than merely diversity of skin colour or gender. If you want a cohesive and competent workforce in which social trust is high and stupidity is minimised, vibrancy is often a route to disaster. When an idiotic idea can be rubber-stamped on the basis of "looking right" rather than being right, you know you're in for trouble.


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