One of the perks of corporate office is the presumption of stature and legitimacy. In other words, we typically bring all sorts of assumptions along when we see or read about a CEO. I want to suggest that we are basically wrong–that the reality of the man behind the curtain is far different than what is portrayed.
For example, on the Sept. 13-14, 2008 weekend before the Monday when Lehman Brothers declared bankrupcy and Bank of America agreed to purchase Merrill Lynch, Treasury Secretary Henry Paulson and NY Fed Chair Tim Geithner summoned the CEO’s of the major Wall Street banks (except Lehman) to the NY Fed building. Paulson and Geithner told the assembled executives that they need to figure out how to save Lehman because if that firm were to go under, the financial market itself would stand a good chance of collapsing. The CEO’s were slow to view the market itself as their responsibility, in spite of the fact that their own self-interest depended on a viable marketplace in finance. On the Friday night and Saturday, they tried to figure out how their firms could profit from picking over Lehman’s remaining assets. On the Saturday morning, they resorted to doing impressions of Paulson and Geithner and betting on a computer game on one of their blackberries. Finally on Sunday, Barclays offered to buy the financially viable part of Lehman and proposed a consortium funded by the other banks in the meeting to support Lehman’s debt. Even though Barclays should perhaps have agreed to join the consortium, the other banks were on the brink of agreeing to contribute at least a billion each to the consortium–essentially propping up the mistakes of one of their rivals while letting another rival (Barclays) to walk away with the “good” Lehman. The British government ended up refusing to allow Barclays to buy even the “good” Lehman, making the CEO’s look good in comparison.
I have to give the CEO’s credit for agreeing to the consortium. I would not have expected it. However, their antics during the first half of the weekend evince a childish behavior that is quite unbecoming for men making millions a year. The financial system hung in the balance and the CEO’s of the banks too big to fail were literally behaving like teenagers until Jamie Dimon of JP Morgan exercised some statesmanship (similar to JP himself in 1907), stepping up to the plate and asking the other execs whether their banks would contribute a billion each too.
Even so, in reading about the behavior on the Friday night and Saturday, I have to conclude that what we are led to believe concerning the CEO’s is far too convenient for them and utterly inaccurate. If I am right, we are subject to an illusion and we don’t even know it. Meanwhile, people are profiting from it who ought not. Yet they need not worry. We will continue voting for the same old candidates. We won’t insist on real accountability in corporate governance. Recently, Andrew Sorkin of the NYT and author of Too Big to Fail, which is my source here (see pp. 330ff), said that he (and we) didn’t know much about what was going on “because they didn’t want us to know” (Tavis Smiley Show, PBS, 11/9/09). That is, it is no accident, kein zufall, that we will likely remain asleep. Perhaps this is for the best, for were we to wake up, the bad smell might be too emetic for us herd animals to bear. Bad smell! Go back to sleep! It is as though we are hard-wired to sleep, and the pill-poppers are only too happy to oblige.
