AIN Blog: Brace for More Banker Backlash
If you’re gainfully employed in business aviation, odds are you vote Republican and cheerlead for robust capitalism, and that’s understandable. Nobody with a mortgage and kids to educate is inclined to bite the hand that feeds, and capitalism-created wealth is what pays the bills for all of us in this business.
It’s also possible you’re not a fan of New York Times columnist Thomas Friedman’s views, in which case you might have missed his reaction to news of a Wall Street scam that has cost Citigroup a $285 million fine. According to the verdict of the U.S. legal system and reports in The Wall Street Journal and Friedman’s paper, Citigroup palmed off some toxic mortgage-backed securities on unsuspecting investors knowing full well they would be worthless; after selling them, it bet millions of dollars against the securities, and sure enough they collapsed, netting the banking group $160 million. Friedman’s verdict is spot on: “It doesn’t get any more immoral than this.”
“The deal became largely worthless within months of its creation,” The Wall Street Journal noted. “As a result, about 15 hedge funds, investment managers and other firms that invested in the deal lost hundreds of millions of dollars, while Citigroup made $160 million in fees and trading profits.”
For business aviation, the sting in this shameless scam is that it serves to rekindle the evil-banker flames and, in turn, reinvigorate the public’s (and the President’s) disapproval of the business jet as the preeminent, enduring symbol of wretched excess and ill-gotten gains on Wall Street, a vilification campaign that had come off the boil in recent months. It adds salt, too, when Citigroup, in agreeing to pay up, trotted out the utterly baffling and by now tired line about “while admitting no guilt or wrongdoing.” It’s time this patently fatuous disclaimer was struck from the permissible lexicon of corporate and personal double-speak, and some encouragement in this direction can be drawn from Friedman’s reporting that the U.S. District Court judge overseeing the case has demanded that the Securities Exchange Commission explain how such serious securities fraud could end with the defendant neither admitting nor denying wrongdoing.
In the meantime, buckle up and fly clean because in the public’s eye, honest wealth remains a contradiction in terms and the jet is still a big fat whipping boy. Maybe it’s time for NBAA to introduce a corporate code of ethics for admission to keep the association respectable. First up for review: Citigroup.
The last word should go to Friedman, who concluded his column by offering some free advice to the financial services industry: “Stick to being bulls. Stop being pigs.”