Joris Luyendijk, Swimming with Sharks: My Journey into the World of the Bankers. London: Faber & Faber, 2015.
Jadaliyya (J): What made you write this book?
Joris Luyendijk (JL): I wanted to know how bankers can live with themselves. I was a complete outsider to finance when the Guardian approached me in 2011 to do an anthropological investigation into the world of London-based bankers. The idea was to try to open up for our readers a complex field such as finance by asking those Guardian readers working in finance to explain how their world functions. There is a very strictly policed code of silence in the City of London, and yet hundreds of insiders came forward to tell their stories.
J: What particular topics, issues, and literatures does the book address?
JL: It looks at the world of finance through the eyes of people working there. And guess what: they are not monsters! That is the good news. The bad news: Banks are monstrous organizations. Over the past forty years deregulation, globalization, and new technology have conspired to create a whole range of conflicts of interest in the very architecture of the financial system. The result is perverse incentives: that is, bankers are often rewarded for behavior that is actually damaging to their clients, their own bank, their bank`s shareholders, or the taxpayer. The problem is not that bankers are evil; the problem is that banks are structured in such a way that all too often decent actions are punished and indecent yet legal actions are rewarded. Hence the need for structural overhaul rather than vague calls for “cultural change” or nicer bankers.
J: How does this book connect to and/or depart from your previous work?
JL: I used to work as Middle East correspondent, trying to explain how the world looks from the perspective of a Jewish settlers, Hamas or Hezbollah activists, or Egyptian generals. I had wound up in the Middle East more or less by coincidence; I was studying anthropology and needed a “people” to do fieldwork on. Egypt seemed like a nice place, so I learnt the language and spent a year there. This led to a book that sold well enough in Holland and Belgium to get me a job as correspondent in 1998. After covering the second intifadah, the aftermath of the 9/11 attacks, and the run-up to the invasion of Iraq, I returned to Amsterdam and got very interested in innovation, particularly in marrying anthropological methods with journalism. The Guardian then brought me over to London for this banking blog.
Comparing the representation of both fields, it sometimes feels as if the way many right-wing people in the West look at Muslims and Arabs mirrors the way many left-wing people look at bankers; both know very little about the group they despise and seem quite comfortable with their ignorance. This then is step one on the way to a better financial system: replace genuine anger with dispassionate insight.
Another parallel is the culture of fear, both in Arab dictatorships and in banks. Talking to a journalist is a sackable offense. The fear in people this engendered and the need for secrecy and anonimization was not unlike, say, Iraq under Saddam, Syria under Assad, and even Egypt under Mubarak.
J: Who do you hope will read this book, and what sort of impact would you like it to have?
JL: Far more voters across the West need to realize just how dangerous the global financial sector has become, how banks took us to the brink of literally unimaginable chaos in 2008, and that the deeper causes of all this have not been taken away. The world of finance in its current form is a clear and present danger and no country is exempt, since the financial sector is now truly global. Bankers I spoke to were hoarding food in September 2008. Some were preparing their children for evacuation to the countryside. The fear ran that deep. And since then? Lots of new rules, lots of promises about cultural change, but almost zero structural reform. We are still stuck with the system that nearly crashed the global economy.
J: What other projects are you working on now?
JL: Understanding the mindset of bankers is enough for now. I am also getting more and more interested in the political side of this: politicians are aware of how dangerous finance is. Why don`t they act? One answer seems legal corruption, such as campaign finance and the revolving door, but there is also a kind of prisoner`s dilemma. Globalization means that finance now operates globally, but politics only on the national or regional level. As a result, banks can play off countries against each other, threatening to leave if measures come that would make them safer yet less lucrative. And this they do, shamelessly, which raises the question: Can globalization ever be democratic if it shifts the power balance so decisively in favor of the global banks?
J: What methodologies did you use in your research for this book?
JL: I wrote a piece in the Guardian saying: look, there must be bankers reading this; are you happy with the way we over at the Guardian are covering your industry? If not, come and talk to me. I know you can be fired for talking to me so I`ll guarantee your anonymity. Soon enough, volunteers began to come forward, allowing me to interview around two hundred of them over the course of two years.
J: What surprised you most?
JL: Just how many perverse incentives you find in the world of finance. When a risk goes well, the bank and the banker get a big bonus; when the risk does not go well, the shareholder and taxpayer pick up the bill. That`s a recipe for disaster. Banks remain too big to fail and as they say in London: Capitalism without the possibility of default is like Catholicism without hell. Or playing Russian Roulette with someone else`s head.
It wasn`t always like this; until the mid-1980s, the risky part of banking was done in partnerships where management and owners overlapped and the top was personally liable. That created a very different culture, one of “long term greedy”: making money with your bank and your client. These days we have a system of “short term greedy”: making money at the expense of the client and the bank.
Another thing that surprised me is that insiders are well aware of what is wrong, but they feel powerless or just don`t care. They also told me: ordinary voters won`t understand anyway; all they`re interested in are bonuses. I don`t agree. I think if you start at the beginning and tell the story of finance though the stories of people working there, you can open up a complex subject like finance to a wide audience. The sales figures of this book in my native Holland prove it. Since its publication in mid-February, the Dutch edition has sold over two hundred thousand copies, or one per minute, 24/7.
Excerpts from Swimming With Sharks: My Journey into the World of the Bankers
Are Master of the Universe types really this self-assured? I was given the opportunity to look behind the façade just once. It started with an email:
“Do you speak to happy bankers at all? Your interviewees all seem so…miserable.”
We met for lunch in a restaurant on Canary Wharf surrounded by hundreds of people dividing their attention between the food on their plate, the person sitting opposite them, and their phone (or phones). He was a salesman aged around forty-five with the rank of director and worked for a megabank in “treasury sales.” To manage its internal cash flows his bank had developed special instruments which the happy banker sold as products to companies and other financial institutions.
We ordered our food and he said that my blog was making him “a little worried. Readers get a distorted picture of finance. There are many happy bankers out there. I love my job and I think treasury is useful, too. We manage and hedge the bank`s risks, and help clients manage theirs; who could be against that?”
He shrugged his shoulders: “Some on your blog are so negative about the sector…It`s not very kind to say, but they just didn`t make it. They get kicked out and then they go complain to the media. It`s tough to take, obviously. You had to go while your colleague is still at his desk. Because he was better. Getting sacked at a bank is like getting dumped by a woman who says: ‘It`s not me, it`s you.’”
The “competitive element” had attracted him to banking and he found the meritocratic culture irresistible, “knowing that those who don`t make the grade get cut. I`m the kind of person who wants to swim with sharks and see if I can survive. To feel myself grow when challenged by harsh, achievement-driven standards. Happy bankers are those who don`t do it for the money but for the thrill.”
At university he was a dropout but his bank had never even asked him about his qualifications. Nor had he ever encountered racism, sexism, or homophobia. “The simple reason is that people just don`t give a fuck who you are. It`s what you can do.”
He stopped talking for a moment and, as I caught up on my note-taking, I remember thinking: fascinating, a genuine twenty-five-carat Master of the Universe. Almost everyone in his bank were fine and decent people, he insisted. “Yes, you have the odd evil exception. Why don`t banks kick these out? Well, as long as they make money for the banks that`s really hard to do.”
With a grin he began to talk about a dinner he had gone to the other day. “People from different walks of life. A woman asked me what I did for a living. Now, I know that some colleagues try to hide they are bankers, but that`s not my style. So we were sitting in a group and before me this guy said: ‘I am a surgeon.’ That went down very well with some of the ladies, obviously. When my turn came I said I was a banker. A fierce discussion broke out with people saying, look at that surgeon, now he is doing something useful. And I went: ‘I think banking is just as useful.’ So this woman next to me explodes into a tirade about bankers being parasites and what have you. She really had a go at me, but under the table her hand was riding up the inside of my thigh. It`s an irresistible mix for some women; this idea of bankers as rich and evil bad boys.”
That was the happy banker. I sent over a draft version of his words, he removed an anecdote about a failed deal that might be traced back to him but just before I was going to publish his interview he sent me an email. Could I wait?
We agreed to meet again, this time in the aptly named Le Coq d’Argent. It is an expensive roof-terrace bar and restaurant overlooking the former stock exchange in the heart of the old City. A few weeks earlier a banker had committed suicide by jumping from the roof and a high fence had just been installed.
Suicide was not on the happy banker`s mind but it was a different person sitting before me. The week before we met he had received “the call.” Only when he was standing outside phoning his wife to say he had been made redundant had he allowed himself to feel something. “Telling her what happened and what this meant for us financially. Only then did I become emotional, when I felt the impact this would have on my family. I went back into the office a few days later, to help a few people out with outstanding stuff, and I could tell they had had a pep talk about having been spared. I remember those, after earlier waves.”
We ordered another coffee—he was no longer a busy man. “Perhaps I already sensed what was coming,” he suggested, referring to our earlier interview. “Maybe the decision had been made already by top management and I had unconsciously picked up on it? Maybe I was mentally preparing myself when talking to you the way I did.”
He said that looking back now he may have fallen victim to the “self-serving idea that we control our fate; as long as you`re good, nothing bad can happen to you, and since nothing bad has happened to me, it must mean I am good and therefore safe; that sort of thing. In the same way military men tell themselves that they can`t die because they don`t make mistakes. But the best soldier can drive over a land mine.”
It had gone exactly as he had thought it would. “My boss called me on my desk and something was up with his voice; could I come down to the first floor? It felt like I was walking up to the firing squad.”
They had given him the bad news right away, just like he knew they would, even using the time-tested formula of “it`s not you, it`s us.” There were several people of his rank for a shrinking number of positions, they told him. The others had more experience.
They were immensely practical, he said, outlining the procedure in clear steps. And then that was it. He said he was proud of how he had held himself together. “Taking it on the chin, not getting emotional, maintaining a professional approach. In fact my boss said: ‘When my time comes I hope I`ll have the presence of mind to take the news like you have.’”
He understood why the bank had blocked his phone and email the moment the meeting with his boss began. “I might go nuts and call clients, send off a string of crazy emails to them, or to the CEO…All the client contracts are in the office, their files…I can see why someone is immediately cordoned off when made redundant; his presence can only be disruptive.”
As he was packing his personal belongings under the watchful eye of a security guard, a colleague who hadn`t heard yet came up to him for some business-related issue. “So, I actually had to tell him: ‘Look, I`ve just been made redundant.’ Then he asked me for help on something; effectively a handover chat.” The happy banker let out a sigh and said in a forgiving voice, “Clumsiness, of course.” A few minutes later he was standing outside with his stuff and a blocked security pass, calling his wife.
He said he was no longer in touch with colleagues, socially. “Going out we`d mainly talk about work; what would be the point? Also, there`s this mercenary quality to life in an investment bank. Given how tough things have got in the industry people are careful about bonding; it can be over in a minute.”
We could hear by the noise of the cars beneath that rush hour was approaching and around us on the roof terrace the first few smartly dressed people were filing in for cocktail hour. When I ordered another round of coffees they came with more of those delicious cookies to justify the crazy price.
“Obviously I am really sorry for what happened,” I started out, slightly gingerly. “But you will agree that this is a really interesting laboratory experiment.” I hesitated again but if you want to “swim with the sharks” you should be able to handle a painful question. “Earlier, you said that only the best survive in investment banks. Now you have been let go...”
The look in his eyes nearly made me regret having said anything. “I still do not think investment banking is a terrible environment. It`s not for everyone, sure, but it`s my natural state. Research shows that the life of a wild animal is mostly suffering: stress and fear and pain. Yet do we believe pets to be happier? I`d rather be the wild animal.”
[Excerpted from Joris Luyendijk, Swimming With Sharks: My Journey into the World of the Bankers, by permission of the author. © 2015 Faber & Faber. For more information, or to purchase this book, click here.]