While it has been almost eighteen years since I worked for JPMorgan
(NYSE:JPM), the news stories this weekend about US authorities launching an investigation into whether the firm had hired the children of key Chinese officials to help it win business for a Hong Kong office brought back strong memories from my first weeks at the bank in the summer of 1983.
In hindsight, I clearly didn’t fit the JPMorgan mold. With the exception of my senior year in high school, when my father was transferred overseas, I had had an entirely public education. Even my college, William and Mary, was a state school. All of my training program classmates had gone to elite Ivy League schools. Many had attended prestigious boarding schools. Most had MBAs.
In my first week, I learned that “summer” was a verb – as in, “I summered on the Vineyard.” That line also required me to grasp that “Vineyard” meant something completely different from “vineyard." Needless to say, I kept my years of mowing suburban New Jersey lawns to myself. Summer I had not.
For most of my training program colleagues, the first day was more like a prep school reunion than a work day. It wasn’t six degrees of separation that united the group; rather, it was just two or three. Through familial and educational ties, the web was tight. And I loved the indirect questioning that the group used to determine how we all fit together. I didn’t realize that when I was asked whether I was from Minneapolis, a coworker was really wondering whether I was the son of H. Brewster Atwater, the chairman of Minneapolis-based General Mills
(NYSE:GIS) . Likewise, inquiries as to whether I had been in the Oval Office or up to Kennebunkport fell on my deaf ears. While I knew the name of Republican political operative Lee Atwater, I had never assumed that people would think we were somehow related. But they did. Even more, they needed me to be. Everyone was a princeling. The class had princelings of Goldman Sachs
(NYSE:GS) executives, football legends, and Washington dignitaries, as well as political leaders from around the globe. Heck, real princeling Prince Albert of Monaco had been in the JPMorgan training program just two years before me.
While the industry was financial services, the real business was connections and how the connections could be used to generate more business better than the competition. By the time I completed the nine-month training program, I had friends in JPMorgan offices around the world; as those friends “revolved” into and out of the industry, political affairs, and other financial services firms, I had an invaluable network of contacts.
That was almost thirty years ago. Since then, the “revolving door” from Wall Street to Washington t
o Warsaw and Wales has only spun faster and faster with more and more people spinning through. Put simply, rather than perpetuating the connections between an elite few, Wall Street has now become the means for many to monetize their national, if not international, connections.
Today, the media’s focus is on JPMorgan and its ties to Chinese princelings. I have no doubt, though, that if people look further they will discover that neither is unique. The game is being played by anyone and everyone who can possibly play it.
When and how connections went from white to gray and then on to black, I will leave to financial historians -- but to those who think this is something new, it is not. Where there is money, power will follow. And as the saying goes, eventually power corrupts.
If JPMorgan is just the beginning of the inquiry, as I suspect it is, no one should be surprised by just how tangled the web woven by Wall Street has become.
And to those who think that all of the noise around this issue is just a tempest in a teapot and that this will all quickly pass, be careful. Hiring well-connected people may be Wall Street’s normal, but it is not Main Street’s. There are a lot of people out there who don’t know the verb "to summer" and who still believe it is a level playing field.
This one could have far longer tentacles than you think.
Peter Atwater's groundbreaking book "Moods and Markets" is now available on Amazon and Barnes & Noble.
“Peter Atwater brilliantly provides a framework for understanding both the socioeconomic hubris that led to the great credit bubble of the past decade and the dark social-psychological hangover that has resulted from its collapse. In so doing, he offers an invaluable guide to what promises to be a very difficult and turbulent period ahead as we experience what he calls the ‘me, here, and now’ behavioral tendencies of the post-crash world.” —Sherle R. Schwenninger, Director, Economic Growth Program, New America Foundation
Author's disclosure: Position in SH; Creditor of JPMorgan
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