Joris Luyendijk - Among the Bankers: A Journey Into the Heart of Finance

Among the Bankers

Copyright 2015 by Joris Luyendijk

First published in 2015 in the United Kingdom by Guardian Books and Faber and Faber Ltd under the title Swimming with Sharks: My Journey into the World of the Bankers

First Melville House Printing: September 2016

Melville House Publishing

46 John Street

Brooklyn, NY 11201

and

8 Blackstock Mews

Islington

London N4 2BT

mhpbooks.com facebook.com/mhpbooks @melvillehouse

Ebook ISBN: 978-1-61219-592-6

Design by Marina Drukman

v3.1

For the late Gerd Baumann,
who taught me that curiosity will do

The real conspiracy in the financial sector is the sounds of silence.

PHILIP AUGAR ,

The Greed Merchants, 2005

Youre on a plane. The seatbelt signs have been switched off, you have just been given your drink, and now you are trying to decide between the in-flight entertainment and your book. The man next to you is quietly sipping his whiskey, while you gaze absently through the window at the sun and the clouds. Suddenly you see a gigantic flash of fire coming out of one of the engines. You call the flight attendant. Yes, she says, there were some technical difficulties but its all under control. She looks so composed and confident that you almost believe her. But you get up, unable to contain your alarm. First the relaxed flight attendant and then an officious cabin manager try to stop you as you make your way towards the front of the plane. Sir, please go back to your seat. You push them aside, grab the cockpit door, manage to open it, and there is nobody there.

The past few years I have spoken to around 200 people who work or have recently worked in the financial district of London. Their stories are very different, but if I were to summarise them in one image, it would be that empty cockpit.

This project grew out of one fundamental question: why many people seem to have so little interest in issues that directly affect their interests. Is it indifference and apathy, or have many subjects simply become too complicated for outsiders to understand? To find out, I had launched an experiment for a Dutch newspaper. I had taken an important, complicated, and apparently boring issue that I knew nothing aboutsustainable transportationand asked a beginners question: are electric cars a good idea? I had put this to an insider, whose answers led to new questions, which prompted interviews with other insiders, and so on until a sort of learning curve of articles and stories had come about. Insiders were happy to make time while readers seemed to appreciate it when you started from zero.

So in 2011 when The Guardian asked me to compile such a learning curve, about the City, the 2008 global financial collapse, and its ongoing effects, I was intrigued. I understood as little of the world of finance as the average reader, and this was a perfect example of an issue with a huge gap between the public interest and the interest of the public. Tell someone their money is not safe and you have their full attention; say the words financial reforms and people switch off.

Only a few years ago the Citylike its U.S. equivalent, Wall Streethad seen the biggest financial panic since the 1930s. Billions and billions had been spent to bail out the industry, yet nobody had gone to prison. Indeed, a few years on, the bankers seemed to be behaving more and more as if it were business as usual again. I happily assented to write the column, hopeful that the papers prestige would gain me access to famously secretive financial-industry insiders.

Thats how a Dutch journalist with five years experience in the Middle East and a degree in anthropology ended up in the City on an unusual investigation: Tintin among the bankers.

When looking into the pros and cons of the electric car, I had started from zero, without doing any research. Adopting a beginners outlook had forced insiders to use simple language and I figured Id try that approach again for this project.

Now I just needed that beginners question. I asked friends and acquaintances in Amsterdam and London what they wanted to know about the world of finance. Almost everyone I spoke to was angry without being able to explain exactly why. Nobody seemed to understand what had actually happened during the collapse of the American bank Lehman Brothers in 2008 or the ensuing crash, the biggest financial panic since the 1930s. I kept hearing, If you can help me understand how it works in finance, then Ill be grateful. But I know that within two days I will have forgotten all that technical stuff again.

All right, I would respond. Is there a question about finance or bankers that occupies you so much that you would remember the answer? These were difficult conversations because people needed to vent their outrage first. Isnt it incredible, they would say, that we had to bail out these bankers and yet none of them have had to pay back their bonuses? Look at how the cuts hit the most vulnerable in society. Meanwhile, bankers give themselves huge bonuses, even at banks that exist only because we saved them. Eventually it occurred to me that my friends were asking the same thing: How can these people live with themselves? That seemed a good startphrased a bit more subtly, perhaps.

As soon as I had settled in London I got out my address book and approached everyone I knew, asking them to introduce me to someone who worked in the City. Responses would take a while to come in, of course, giving me the chance to explore my new home in the meantime. I had always thought of London in the same category as Berlin and Paris: the capital of a big European country. But London is the size of Berlin, Madrid, and Paris put together.

I took the tube into the centre of town and went for a walk. Now I could begin to see for myself that the City as a term is no longer accurate. The financial sector in London employs between 250,000 and 300,000 people. That is a lot of jobs, and they have begun to spread across the capital. To the west near Piccadilly Circus lies the well-heeled and discreet area of Mayfair, where youll find the more adventurous types of professional investors of other peoples money: private equity and hedge funds as well as venture capitalists. Then there is the historical City or Square Mile near Bank tube station, where many brokerage firms, the insurance sector, and a number of big banks such as Goldman Sachs are surrounded by architectural icons such as St. Pauls Cathedral, the Bank of England, and the illustrious former Stock Exchange (now a restaurant and shopping centre). Moving east towards City Airport you reach Canary Wharf, a former harbour where increasing numbers of banks and financial institutions have their headquarters. Canary Wharf is made up of seductively shiny glass skyscrapers and a huge shopping centre, fringed by manicured greenery, each corner observed by the constant gaze of CCTV cameras. The area is privately owned and privately controlled, as any activists who gather to protest are swiftly informedevery piece of land on Canary Wharf apart from the 50 yards outside the Jubilee Line station is private.

Several days passed while I continued wandering around the city. I hadnt had a single response to my request for introductions to financial insiders. I was beginning to worry when a friend I knew from Jerusalem invited me to a party where he introduced me to Sid. Sid was in his late thirties, tall and broad-shouldered, the son of immigrants. After a career as a trader with a number of major banks, he had joined a few colleagues to start a brokerage firm: a company that buys and sells products in the markets on behalf of clients for a commission. Helping outsiders understand the City was more than overdue, Sid said in a welcoming voice. Why didnt I come over and spend a day at his firm? The only condition was that I could not identify him or his company by name. Clients wouldnt understand why were talking to the press.