I consider myself an individual of high moral standards, who started from a very modest upbringing and who rose to the top of Wall Street through hard work and responsible decision-making.

I have unfortunately worked alongside individuals (many of whom are praised in the financial media as masters of the universe) with highly compromised ethical standards, and the aggregate of this across one of the largest industries in the world has been a major factor in the financial crisis. I've seen firsthand the way that financial institutions may take advantage of loose regulations and a flawed compensation system to feed their own greed. Often, this takes the form of pulling the wool over the eyes of regular people when it comes to their personal financial affairs, but more often, it is the result of the ability to manipulate the internal policies and procedures of a "too-big-to-fail" bank.

Ask me anything!

Comments: 205 • Responses: 42  • Date: 

Taimur61416 karma

Would you care to delve into what exactly these individuals have done that have 'highly compromised ethical standards'. Thank you very much, very cool IAMA

BigBadBanker12339 karma

What you have to understand is that the most senior people on Wall Street are also the most highly educated and probably politically savvy. On top of that, they all have one thing in common: the lust for money and wealth. Very few individuals that I know are in their positions just because they're good people, great leaders, or hard workers.

But back to your question...I'll give you one example. During the height of the financial crisis, I had dinner with the then-CEO of Bank of America. He had recently arranged the purchase of Merrill Lynch, and was visiting a branch office outside the U.S. He was also being accused personally of deceiving shareholders by covering up the fact that Merrill Lynch would lose billions of dollars in the coming quarter. His behaviour during this 24-hour period when he was abroad was 100% focused on saving his own hide from a lawsuit, while at the same time, he had approximately 60,000 new employees' and 250,000 existing employees' as well as millions of customers' financial lives at stake. He chose to ignore all the major issues outstanding as a result of the merger HE engineered, and focused solely on his own legal trouble. It was highly irresponsible conduct for the CEO of any company, much less the world's largest bank, particularly after the company had assumed so much risk at his direction and sole discretion.

Thanks for your question, I hope this information provides a lens into why ethics matters in the financial industry.

tossy_mctosserson-6 karma

Is there proof in this thread anywhere? I'm sorry, but I work alongside lawyers and financial guys that are no where near this level and even they would not/ do not talk like this.

The fact that you don't understand why the CEO would do that vs. their shareholders, etc seems more like someone that's recently read a book about the financial crisis vs. an actual player.

I call bullshit.

BigBadBanker1233 karma

The moderator has verified my credentials. I agree that most people are not as blunt as I, especially when they are still on the inside.

Harmonisgenuis13 karma

If recent years have not changed the damaging culture on Wall Street, what will it take?

BigBadBanker12323 karma

That's a great question, and I need to think about it a bit more...but it comes down to Wall Street's ability to generate mega-profits during good economic times. Since a portion of those profits end up trickling down to the executives and senior managers of those companies, I think until a constraint is placed on the industry's ability to earn and pay out profits, there won't really be a substantial change.

mrpickles3 karma

Do you think a tax on trading securities would help?

BigBadBanker1234 karma

In short, yes. Charging an investor the true cost of what it takes to maintain the financial system, in good times and bad, via a transaction tax seems like a very good idea to me.

scc131 karma

"a constraint is placed on the industry's ability to earn and pay out profits" - this makes no sense.

So, if the firm makes money, where should it go?

BigBadBanker1237 karma

Shareholders as opposed to employees.

What I was trying to say is that the industry is extremely profitable...probably too profitable. The profit margins are higher than most other mature industries. Those profits would be lower if, for example, limits were placed on interest rates consumers can get charged, or there was a tax on transactions which were short term in nature.

But as long as profits are great in good times, and there is no buffer for a rainy day (or bad economy), and banks are allowed to pay out those profits to employees...the industry will be filled with many people whose main goal it is to earn the most money they can. I just don't think that is a healthy model.

Michael_Huntington12 karma

Definine "investment banker." It's a phrase that gets thrown around a lot these days, and 90% of the time it's used incorrectly.What kind of deals did you work on?

BigBadBanker1239 karma

I am using the term Investment Banker to describe myself, not because I was part of the M&A department or a coverage banker in the Investment Banking Department. I am using the term generically to describe the people who work in the securities business. These could be capital markets origination experts, bond or stock traders, research analysts, client relationship managers, etc.

I was in general management so had a view of all these areas.

Is your question about my credibility, or are you really just not sure what people mean when they use the term investment banker. I agree it is misused a lot these days because it sounds slick.

always_polite1 karma

I was also wondering what your role was. Most people that work in IBD associate IBD with M&A. Do you mind if I ask what your background was? Schools and how you made it in the industry?

BigBadBanker1231 karma

Sorry, that might give away who I am and in order for met to keep giving out some info I really cannot afford for BofA to find out I am doing this at all. Let's just say my career spanned many different parts of the company, but I started out in a back office position.

sluggosmith10 karma

Two politics questions: first, what's your opinion of Elizabeth Warren, and do you think she'll have any real impact on Too Big To Fail? Second, does anyone in that world recognize the Obama administration for having any hand in the enormous growth of the financial sector, or is it largly vilified? Thanks!

BigBadBanker1235 karma

Thanks for bringing up Senator Warren. I do think she is hot on the trail of a very important issue in the financial system, which is the role regulators play in policing the conduct of the banks. Her grilling of government officials responsible for enforcing laws has been spot-on, and I hope she continues to press the SEC and other agencies to do their jobs more effectively.

In my experience with regulators not only in the U.S. but across the globe, the SEC, the Fed, and the OCC have not kept up with global standards and are ill-equipped to confront the complexity, sophistication, and speed of global systemically important financial institutions (SIFI's). In fact, regulators and central bank officials in places like the U.K., Japan, and Singapore are becoming the thought-leaders in regulation of the global financial system.

karma30008 karma

Do you think that relationships between regulators and the banking industry is too cosy? And perhaps may affect the independence of those regulators?

BigBadBanker1236 karma

In short, I don't think it's too cosy, simply because the exchange of people between Wall Street and public servants at the SEC, the Fed, or the OCC is not that significant. The number of people moving from public service to Wall Street and vice versa has increased over the last decade, however, the numbers are still fairly small in comparison to the total number of people employed in both public and private institutions.

But I do think that regulators have missed the boat and let Wall Street outsmart them. That topic's a whole different discussion.

Rivstein8 karma

Did you go to an Ivy?

BigBadBanker12313 karma

No, I didn't, but I did get a Masters degree in finance and joined B of A after I graduated. But with regards to Ivy League graduates, I certainly worked with many of them over the years. I always tell my kids not having an Ivy League degree has absolutely no impact on your probability of success or your happiness in life. What it might do for you, however, is get you access to a more select opportunity at an investment bank. I do believe that once inside Wall Street, an Ivy League pedigree doesn't provide you much of an advantage - it comes down to your willingness to work hard.

scleitrim5 karma

I agree that once inside Wall Street an Ivy League degree does not matter as much as hard work, but half the battle is definitely getting into Wall Street in the first place! I feel like you either need a family member already established at a company, know someone, or walk on water to get a job or internship these days

BigBadBanker1238 karma

That might be true for all the front office positions like investment banking, trading, securities, and sales. However, those jobs comprise a very small percent of total Wall Street employment and the other divisions of a bank may not be quite as sexy and glamorous but can provide really interesting careers and lucrative compensation. I in fact did not spend most of my career in a front office role.

scc133 karma

I like the egalitarian message you are promoting, but the fact is having an Ivy League (or a top 15-20 school) education does have more than "absolutely no impact on your probability of success". Take a look at compensation studies from those schools versus second or third tier schools.

BigBadBanker1234 karma

You are right, I should not have used the word absolutely. However, I don't think that it is the Ivy league name itself that gets you the money. What gets you the higher comp is the ability you bring to the table. It just so happens that some of the smartest and most capable people go to Ivy's...but not everyone does. I had a boss for 10 years who rose to very high levels of the company who did not have a university degree. She was a superstar.

karma30005 karma

Do you really think, especially given the large rewards available, that ethics is able to be taught or instilled in individuals or companies?

BigBadBanker1239 karma

Ethics comes down to your values. A lot of your values you learn from your parents and your family and from your early years in school. Someone has to teach you what's right and wrong from some point in your life. The people who haven't been taught are actually the people who probably don't have high ethical standards. In fact, they have no ethical standards. So, if you didn't learn ethical standards in school or from your parents, why can't you learn them from your manager or at your place of work? Of course there will always be people who value money more than ethics, and the higher the reward, the more people that are probably willing to compromise their ethics. But, that dynamic is exaggerated if there's no downside to bad ethics. So in short, I think companies, especially the big ones, have no more important obligation than to ensure the ethical standards of their employees are high.

r1nce5 karma

What would you do to fix it?

BigBadBanker1237 karma

Great question, but a big one...I am not sure i have all the answers. And I am sure I don't have the silver bullet. However, keep following the conversation here and I think you will get a gist of where I am going.

dgaaaaaaaaaa5 karma

Two questions:

1) Do you think removing the bonuses incentive from investment banking (and going back to just salaries) will help the ethics problem?

2) Sorry to be blunt, but is it true that the job is boring?

BigBadBanker1237 karma

I dont think there was ever a time when investment bankers were paid on salary alone, was there? But even if there was, I don't think eliminating bonuses would solve the problem. I don't think that having incentives for good performance is a bad thing. I do think that the definition of good performance does need to have a definition with a better ethical standard attached to it.

I think the world of finance is anything but boring. You have to like numbers to make it a life long career, but it is certainly not boring and in fact touches so many different aspects of life and industry that your opportunities within finance are boundless.

MasMacho5 karma

You touched on how the top dog I-bankers have a "lust for money and wealth". What other attributes does a good I-banker have?

BigBadBanker1238 karma

That's a very interesting question and I have to say not all investment bankers are bad guys. Most of them are very bright, energetic, positive thinkers and some of them even creative geniuses, so I don't want you to think that greed and the accumulation of wealth is the only thing on their minds. But certainly most of them have a gift for bringing buyers and sellers together and are therefore very persuasive personalities and pride themselves on their ability to "do a deal" for their client.

If I had to describe the most important attribute of an investment banker in one phrase, it would be goal-driven.

taglione4 karma

Give me one single suggestion to get richer in the course of a year.

BigBadBanker12312 karma

Work harder and save as much as you can.

karma30003 karma

What do you think about European Style legislation limiting the sizes of bonuses/compensation that can be paid?

BigBadBanker1237 karma

I don't know enough about the specifics of the legislation to have a view as to whether it will be effective. These sorts of measures are, in principle, a rather blunt instrument and may have unintended consequences. What I do know is that the devil is usually in the details and to date, Wall Street has been able to avoid any real constraints on executive compensation.

akaxaka3 karma


BigBadBanker1234 karma

Already verified with /u/brownboy13.

BowlOfTrailMix3 karma

Around how much money were you making?

A lot of movies and popular culture present cocaine as being a major force on wall street with many i bankers abusing the drug. Is that stereotype true and do you think it, in any way, leads to more risk taking or bad judgement?

BigBadBanker1232 karma

Answered the money question in another comment.

Re drugs, I did not see a lot of it, nor do I think it has much of an influence in the industry. The people who work in finance are for the most part slaves to their jobs and doing drugs is not conducive to doing work.

scleitrim3 karma

Aside from the negatives you have expressed here, was there anything that you loved about your job that you will miss?

BigBadBanker1238 karma

Too soon to say right now - I've only retired recently, and I'm still just enjoying the freedom of being out of the rat race.

desu1113 karma

Is China's growth over rated/ over hyped?

BigBadBanker1232 karma

Sorry, not really my area of expertise.

Ollie8882 karma

  1. Do you feel HFT is creating more or less jobs in the industry?
  2. What is your on opinion on investment bankers having access to trade information before the public?

BigBadBanker1233 karma

  1. HFT means high frequency trading?
  2. i think you are referring to "material non public information" or MNPI...i think they need access to it to do their job...the crime comes when they use it for personal gain. there are laws against that, and if they get caught they go to jail. it is certainly a bad thing to do, but it actually rarely happens, at least in my experience...

Ollie8881 karma

Yes, high frequency trading.

Sorry, should have clarified this. This relates to my first question. The HFT traders are utilizing computers to analyze orders then positioning themselves accordingly in the course of a few miliseconds. How does this effect the average trader?

BigBadBanker1232 karma

I think it basically has eliminated the spreads in the market that floor brokers used to earn...and probably does not have a negative impact on consumers. It is akin to when the NYSE went from fractions to decimals...the people hurt in this case are other industry professionals, and not necessarily the end user of these products.

I do think however that this area requires a lot more thoughtful oversight from regulators as the ability to manipulate markets with technology is an ever growing risk.

Hope this helps.

window52 karma

Do big banks benefit when the Fed expands the money supply? Are all banks able to borrow money from the Fed or only big banks?

BigBadBanker1237 karma

Sorry, I am not really an expert in that area and don't want to just share my hunch as opposed to a 100% accurate answer. Try searching for a macroeconomist.

luxae2 karma

What would be the best path to take if one wishes to become an investment banker or to work in that kind of environment?

BigBadBanker1236 karma

Get the best education you can by studying hard. Learn as much as you can learn about the industry through reading the WSJ each day and any other financial media. And knock the door of as many banks as it takes you to get a job...never give up.

MyLittlePoneh2 karma

hey, i might be a bit late but here's my question: I thought the banking industry has setup CSR programs and eithics departments to moderate unethical conduct? Does it not work or have you guys not implemented such measures?

BigBadBanker1231 karma

CSR means Corporate and Social Responsibility? If yes, these sorts of functions are gaining some traction and do some meaningful work. However, I would say that in my experience in a big bank they don't necessarily connect to the business itself. They are often just sideshows so that senior execs can say their company did something good in society, while perhaps still carrying out business practices that are questionable. I really hope that changes and BofA has done something about it in the form of a Green Fund where loans are made to businesses trying to do a better job environmentally. These sorts of connections between CSR and the business are what it takes.

tsubi2 karma

how much were you paid?

BigBadBanker1235 karma

My father was a hard working guy in manufacturing and did pretty well over his career. I always wanted him to be proud of me, but could never actually tell him how much money I made, aside from my first few years in the business at entry level. My bonus in any one of the past 10 years year was probably 10 times his annual salary at the peak of his career.

habisch2 karma

I work in technology and my brother is an investment banker at a large firm on Wall Street. We often have discussions about the two always-relevant industries and how they relate to one another.

Question(s) for you: Within the last decade, advances in technology & social media & elsewhere have led to a dramatically increased amount of information available to the general public (legally or not; leaked or otherwise). This often means insight into business practices that have, historically, been kept behind very closed doors. Do you think that technology's current trend toward an almost forced transparency will bleed into Wall Street, thereby curbing unethical behavior simply because public knowledge of some practices could be massively detrimental? Is this an unrealistic line of thought? Is Wall Street simply too powerful to be affected by public opinion?

Thanks very much for your time.

BigBadBanker1232 karma

That's a good question.

In short, I think discussions like this are very healthy for the ethics of the industry and as the saying goes, "sunlight is the best cleanser."

Although finance is one of the most powerful industries these days, there are a lot of people within who want to do the right thing. The more support those people can get from social media, the more chance there is of successful rehabilitation of the unethical practices.

RedditsLord1 karma

Do you have any insight that the crisis in greece, Portugal and Ireland were indicted by usa government through fmi just to cripple the Euro?

BigBadBanker1231 karma

Hi, sorry not really. That is not quite my area of expertise.

jamesdakrn1 karma

Which division did you work in? And do the hours get better as you move up the rank?

BigBadBanker1231 karma

I worked across a lot of different divisions during a career of more than 2 decades. No, the hours are the same...long.

Warranthad1 karma

Do bankers feel personal responsibility for market failures or economic downturns?

BigBadBanker1231 karma

I don't think any one individual can or should. The markets and economy are enormously complex and globally intertwined...it is a 'system' of mechanisms with many variables. The oversight of it needs to be both from within large companies who operate in those markets, and from outside the markets by regulators and industry groups. I think the systemic risk is too high these days simply because the insiders and outsiders are too far apart and not aiming at common goals.

Rivstein1 karma

What foreign language do you believe it's most useful in the world of investment banking? Other than Spanish...

BigBadBanker1237 karma

English. What you have to realize is that investment banking is a global business, and although the U.S. is the largest single market in the world, the aggregate size of markets in the rest of the world is many times larger. So for you, I assume anything other than English is a foreign language, but for the rest of the world, English is probably the foreign language, and therefore there's a tremendous advantage in doing global business as a native English speaker.

Having said that, it always helps to know the language of the country you're working in, so if you anticipate working in a country where English is not spoken widely, learn it. But I think some of the best investment bankers have deep and specific industry expertise as opposed to foreign language ability.

allenahansen1 karma

Sorry I missed the AMA, because I had a pocketful of questions for you. But if you see this, I'd like to know how they got Ken Lewis to pick up ML's portfolio of obviously toxic mortgages. (I knew housing was about to explode, everyone I know knew that housing was about to explode, how could Wall Street not have known housing was about to explode?)

Secondly, when did you personally get out of MBS? And finally, is there any truth to the rumor that Bernie Madoff was managing Mossad's retirement portfolio and he plead to avoid being whacked?

Thanks so much for doing this AMA. You can message me privately if you'd prefer to answer off-site.

BigBadBanker1231 karma

Ken was a megalomaniac and he desired Merrill Lynch not for the institutional business but for the huge retail network of financial advisors...the thundering herd. He was blind to the fact that he was about to get legged over by a sinking ship, because I think he just wanted to be a massive retail player. There are several good books out there about this, which are very accurate...best one is Crash of the Titans. I was interviewed extensively for this book, but not quoted directly. Many other of my colleagues were as well.

fuckmatt1 karma

  1. Are you originally from New York City?

  2. Would you agree that securities regulation is functionally dead? It seems to me that the concept of an effective regulatory system is a lie we keep around so that executive politicians can pretend to be on the side of bankster prosecution. Corporate/political marriage is a trend that annuls any legitimate work an agency such as the SEC accomplishes. Besides legislative and financial handouts, I think that where a politician is lenient a banker is shrewd, and the greater damage to our financial system comes from people secretly taking advantage, in the form of LIBOR manipulation and ratings agency lies and the like. How did you notice your colleagues/associates take advantage of the lack of oversight?

BigBadBanker1231 karma

  1. New York State
  2. I do agree...the senior executives in a company like BofA pay lip service only to the regulators, particularly in the U.S. The Compliance department deals with them day to day and I do agree are much more shrewd than the regulators themselves in most situations. It is true that the burden of regulation is increasing, but more importantly the burden of bad press by violating a regulation is a much scarier predicament for bankers...so although I don't want to color all bankers with the same brush, most of them in fact ignore the spirit of regulation and just try to get by with meeting the technical requirements. Hope that makes sense.

fuckmatt1 karma

I agree that the threat of bad publicity can be powerful against large banks, but to an extent; major news outlets (especially within America) do not give scandals such as LIBOR or the recent BoA whistleblower major coverage. I think that some of the fault lies within the apathy of the American public at large; they are desensitized to news of financial wrongdoing, especially in 2013. However, I wonder how long our country can really exist without prosecution of immoral bankers, and the larger trend of lenient/facetious regulation in corporate America.

BigBadBanker1231 karma

Really agree with you that dealing with people's financial lives should be a profession with the highest of standards.

GeneralTry1 karma

I met someone who worked for the Federal Rserve of the US. He met a lot of bankers and he said that most of them would sell their grandma to make an extra 5 bucks. Is this the kind of attitude seen in Wallstreet?

BigBadBanker1232 karma

Sounds pretty anecdotal and biased to me. There are a lot of great people in finance, I wouldn't paint them all with the same brush.

3HoursWTF0 karma

It seems that a lot of the CEOs in your industry make enough money annually for several lifetimes, and I wonder what you have to say about that. Are they really worth thousands of times more than your younger employees that are earning 80-100k a year? Is there a self reciprocating system at the top of most banks that inflates executive compensation?

BigBadBanker1231 karma

I agree that executive compensation in the U.S. is a unique phenomenon not found in other mature economies. In places like Japan the average compensation of an executive relative to a factory worker is something like 40-50 times...whereas in the U.S., it can be in the hundreds. Something is wrong there.

freakyshanequa69-1 karma

I like way OP is totally all 'innocent ole me' while recounting stories of eating with CEO of Bank of America.

it's like dealing with my five year olds. 'Who spilled the juice?'

'Not me!!'

So your worked at merrill lynch and were not part of the problem but the solution huh?


BigBadBanker1233 karma

I appreciate your comment and probably do deserve some grief for being part of the system for a long time. All I can say is it took me a long time to get to where I was when I left and when I got there I realized it was not the place for me...that is when I decided to leave.

imhere4dalaughs-2 karma

So you recently RETIRED.....hmmmm. So you didn't leave with your 'high moral standards' before? Made enough money and now want to show how dirty YOUR WORLD is? I say rather hypocritical.

BigBadBanker1235 karma

Well, you may have a point there. I won't hide the fact that I had a lucrative career for many years. I have tried not to blanket everyone in the industry with the same ethical issues. What I am trying to demonstrate is that the more senior I got, the more I saw issues, but the less I was able to do something about it. I did put my neck out many many times and in fact the last few years in my job I reached a dead end, probably as a result of being a bit too confrontational about people I thought weren't able to "do the right thing".

Ultimately I decided to leave in order to try to influence a bit from the outside rather than from the inside. When you are on the inside it is easy to rationalise away ethical dilemmas, especially when everyone else is doing it.

imq-7 karma

Soo...... how is life in capitalist america?

BigBadBanker1234 karma

Who said I was in America?

imq-10 karma

Why can't you guys do good for once. Instead of paying out politicians for let's say keeping oil companies safe and well, can't you pay out politicians for good stuff like renewable energy plants?

BigBadBanker1233 karma

Do you really think that bankers have never done any good for society? Do you have a car loan, mortgage, credit card? I bet a big bad bank has lent you money at some point in your life when you needed it. Did you pay them back?