Psychopaths in the Midst

The average Wall Street banker will never be mistaken for a librarian. They are uber-competitive, short tempered, aggressive and willing to take huge risks without a second thought of the consequences. That has served the economy well at times, while other times leading to our biggest economic crises. From the late-19th century collapses  and the Great Depression to 1987, the Dot Com Bubble and the 2007-08 mortgage fiasco, it was irresponsible bankers that led our economy (and sometimes the global economy) into disaster. Greed may be good for those who are greedy, and in moderation for the economy as a whole, but what if it is unchecked by regulation, rationality or any sense of right and wrong?

This is the question that emerges if a recent study by journalist Sherree DeCovny is to be believed (Huff Post). She argues that 1 in 10 Wall Street employees are clinical psychopaths, meaning they lie often, have trouble feeling empathy for others and are drawn to take dangerous risks (unaware or lacking care about the consequences). The overall rate for the population is approximately 1 percent, though I have long wondered if media and consumer culture aren't pushing more Americans toward sociopathic tendencies. I see it in many youth today, who seem less able to connect with or feel empathy towards others. But if Wall Street execs and workers are psychopathic, this has much more serious implications for all of us. They will be willing to take unwarranted risk, unscrupulous about fraud and corruption, make morally questionable decisions and care little for the consequences of their actions.

This, in fact, describes the situation rather perfectly in the lead-up to the mortgage meltdown. All the way from traders and top exes at the major banks down to those giving out loans and appraising houses, there was a general sense of moral elasticity that would have once landed one in jail or facing public executions. Decisions were made purely on the short term profit, on the personal gain available and with an underpinning of moral hazard (with bankers certain the country would bail them out if trouble did arise). The general sense of entitlement and moral turpitude was perhaps best captured in the HBO movie Marin Call, that recounted with relative accuracy what happened with Goldman Sachs, as they sold bad instruments to most of their customers. These Wall Street Execs were essentially following the lead of the business world, where Enron, Worldcom, Arthur Anderson and a host of other corporations were engaged in risky and illegal behavior that resulted in the companies folding and stock holders suffering huge losses, while the top execs often walked away unscathed. 

And this provides yet further proof of the need for government regulation and oversight of Wall Street and corporate America. Psychopaths are dangerous, for among other reasons because they lie without compunction and are generally charming (lest us forget the Bank chiefs testifying to Congress after the collapse), thus making us believe that they have our best interests in mind. But if we allow the country to continue "flirting with" and "dating" these dangerous economic lotharios, they will take down the U.S. economy, smiling brightly as the world around them explodes.