Wall Street now has its equivalent of a reality TV star. A clip from the BBC of a self-described trader admitting to dreaming of financial doom as a money spinner has spread like wildfire. The Gordon Gekko wannabe doesn’t work for a Wall Street firm but his vulgar amorality offers a description of trading that has struck a chord with a public still smoldering over bank bailouts.
Ersatz trader Alessio Rastani wasn’t a big name in finance. He was nobody until this week. Still, he has some claim to represent the primitive Id of traders everywhere. His obvious indifference to the human suffering caused by financial collapses and economic downturns – in this case the crisis facing European nations – seemingly shocked the public, not to mention BBC presenters who let him rant ad nauseam.
Few traders, however, would have failed to recognize his priorities. The best of them should be able to exploit disasters as well as coast upward in good times. In fact, traders are often at their worst when they start to care – as usually masterful hedge fund godfather George Soros showed when he lost money investing in Russia in the late 1990s, seemingly out of a desire to help politically.
Wall Street executives prefer Rastani’s dirty secret to remain on the trading floor. The likes of Goldman Sachs’ boss Lloyd Blankfein have worked hard to underline the social benefits of banking. While his claim to be doing “God’s work” was a throwaway joke, he has argued that the financial industry helps companies to raise capital, generate wealth and create jobs. This is not an entirely spurious point, if not the whole picture.
Confessions of brutal self interest – whether credit agencies admitting they would rubber-stamp products structured by cows, or Enron traders gloating over power outages – reliably shock the public. Yet they are useful reminders of the need to create regulatory frameworks that curb rapacious excess without squelching capital formation.
In that respect, though Rastani’s infamy will be short-lived, he may have done the public a favor during his fifteen minutes.