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The Banking Jungle Book: Wolves, Lions and Chickens

Over the weekend, there were lots of references to animals in banking.   

It started with the Financial Times
discussing the issues of Jerome Kerviel and the fact that traditional
commercial bankers should stay out of investment banking.  In this
context, it refers to most bankers as chickens, whilst investment
bankers are like a pride of lions:

"Commercial and retail
bankers are like battery hens. You put them in a small cubicle,
pressurise them with tough sales targets but provide a decent salary,
and they will produce a steady steam of returns. Most are conservative,
somewhat harassed souls, who seldom think to bite the hand that feeds
them.

"An investment bank is more like a zoo, full of
bizarre, prideful and sometimes dangerous animals. A zookeeper who
pushes them around, or issues orders, is asking to have an arm bitten
off. Instead, the job is to keep the animals in their cages, so they do
not savage the paying customers, while understanding their individual
behaviour patterns."

Investment bankers maybe compared to
something more like a pride of lions according to the FT, but they’re
more like a pride of lions on Cocaine according to the book I’m reading
at the moment. 

In the recently released book The Wolf of Wall Street,
Jordan Belfort describes himself as a wolf rather than a lion.  The
book has already been snapped up to be a major movie starring Leonardo
diCaprio by Martin Scorsese – do these guys ever not do anything together? – and
the book seems to divide emotions, as half the reviews on the US Amazon
love it or hate it, so I’m not recommending it to you.  However, it is
a true story written by the guy who inspired the film Boiler Room, and follows in the tradition of Liar’s Poker, Barbarians at the Gate and The Bonfire of the Vanities, to which it pretends.  And of course, the thoroughly marvellous Future of Banking in a Globalised World (ed: nothing to do with the aforementioned, just a shameless plug). 

Of
course, there have been many books about Wall Street’s failing, and
having just seen Jerome Kerviel’s failures, alongside many others (NAB,
AIB, Barings, Credit Suisse, etc) these books help to illuminate,
entertain and disgust.

Here’s a few of Jordan’s insights which show you the beasts of the broker-dealer jungle in action:

Advice on his first day in the offices of broker LF Rothschild: "People don’t buy stock, it gets sold to them.  Don’t ever forget that." 

He
was then put on the phones to connect brokers and, at 9:30 the sales
manager told them to hit the phones.  "Within minutes, everyone was
pacing about furiously and gesticulating wildly and shouting into their
black telephones, which created a mighty roar.  It was the first time
I’d heard the roar of a Wall Street boardroom, which sounded like the
roar of a mob (or pride of lions) … it was the sound of young
men engulfed by greed and ambition, pitching their hearts and souls out
to wealthy business owners across America."

He then went to
lunch with one of the senior brokers, Mark.  Mark "reached into his
suit jacket pocket, pulled out a coke vial, unscrewed the top, and
dipped in a tiny spoon.  He scooped out a sparkling pile of nature’s
most powerful appetite suppressant and took a giant snort …  I was
astonished.  Right here in the restaurant among the masters of the
universe.  Out of the corner of my eye, I glanced around the restaurant
to see if anyone had noticed.  Apparently, no one had.  After all, they
were too busy getting whacked on vodka and scotch and gin and bourbon
and whatever dangerous pharmaceuticals they had procured with their
wildly inflated paychecks."

Why did they behave this way?

"The money’s great, but you’re not creating anything, you’re not building
anything.  So after a while it gets kinda monotonous.  The truth is
we’re nothing more than sleazoid salesmen.  None of us has any ideas
what stocks are going up!  We’re all just throwing darts at a board."

No wonder we watch with awe as the Jerome Kerviel’s get stressed out trying to buck the system to make a buck.

The
book goes on to tell of Jordan’s roller coaster ride of selling penny
stocks to millionaires, to becoming a multimillionaire himself – making
$50 million a year – and earning the nickname the Wolf of Wall Street

His
firm even created the game of midget tossing, where they paid $5,000 to
a vertically challenged person to spend an hour wearing a velcro suit,
and being thrown by the brokers against velcro mats.  The person who
chucked the little sucker the furthest earning a gold dusted booty.

The
other factor however, is that with so much money he became hooked on
hookers and all sorts of chemicals.  At one point, the wolf’s daily
regimen included:

  • 90 milligrams of morphine and 40 milligrams of Oxycodone for pain relief;
  • 12 Soma’s as a muscle  relaxant;
  • 80 milligrams of valium, 8 milligrams of Xanax and 20 milligrams of Klonopin for anxiety;
  • 30 milligrams of Ambien for insomnia, which is not surprising considering the above;
  • 20 quaaludes purely for recreational purposes;
  • a  gram or two of cocaine "for balancing purposes";
  • 20
    milligrams of Prozac and 10 milligrams of Paxil as an anti-depressant
    due to being so fed up with being hooked on all these drugs;
  • 8 milligrams of Zofran to cure nausea from swallowing all the Prozac; 
  • 200 milligrams of Fiorinal for the migraine caused by the Zofran;
  • 2 heaped tablespoons of Senokot to cure the constipation created by the Fiorinal;
  • 20 milligrams of Salagen for the dry  mouth from the Senoko; and
  • yes, of course, a bottle of whisky to wash it all down with.

It’s amazing the guy is still alive.

Re-telling
the high stress, high pay lifestyle of a top City slicker, it reads
more like Keith Richards with a Death Wish … and that’s saying
something.  But then it also speaks of the crass hedonism of those who
think they are better than everyone else.  American Psycho at its grandest, boldest and most bizarre and nauseating.

Me?  I’ll stick with Guns ‘n’ Roses … welcome to the Jungle.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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