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Is Wall Street’s Newfangled Honesty Just A Fancy Way Of Lying?

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In the last week, Citigroup, Deutsche Bank, and UBS announced that they wrote down $1.4 billion, $3.11 billion and $3.4 billion in the third quarter, respectively. In the land of reality, where sane human beings live, these numbers would be considered bad news. Rational people would perhaps take the opportunity to tell the banks, “Hey, you fucked up,” as a way of motivating them to do better. Instead, not only were the banks not given the smack in the face they so desperately need, but they were praised for being honest. “You screwed up big time, but we’re just so happy you’re telling us the truth for once!” has been the gist of it. Obviously those in charge of the truth-telling mission jumped on the back-patting bandwagon, and praised themselves, too. "It was about transparency," said DB Chief Executive Josef Ackermann. "We did it, and several others -- UBS, Citibank -- did it as well. It was important to re-establish people's trust in the products and in the markets."
The best part is that, as the conspiracy theorists at the Journal point out, this whole coming clean shtick is more or less an elaborate lie. The banks have provided “clarity,” in so far as they admitted to BILLIONS in losses, but the clarity is only packaging in which to ship a box full of lies that will later help the people who “can’t tell a lie” tell more lies. And if you think about it, that’s just good business:

"If you're a smart CEO, you're going to write off everything and then some, maybe even to below-market prices, because you're going to be hidden in the woodshed with everybody else," says Daniel Genter, chief executive and chief investment officer of RNC Genter Capital Management, a Los Angeles-based investment firm that manages about $3 billion in bonds and stocks, mostly for high-net-worth individuals. "They'll make it look a lot worse than it is, but that's the smart move, because you've got little to lose and you might get some of it back in a quarter or two."

But maybe we’re just being cynical assholes? Deutsche Bank promises that it "continues to apply accounting and valuation principles consistently with prior periods" and a UBS spokesman told the Journal that the bank’s writedowns are “appropriate and follow established accounting principles and industry standards." Citigroup has “taken impairments in the third quarter based on a rigorous process applying appropriate accounting principles." Goldman, which hasn't even written anything down but is just so bursting with honesty that it had to tell someone about it, was in “constant contact over the summer with the Securities and Exchange Commission to discuss the way it was pricing tough-to-value securities.”
All this chest-bumping for telling the truth really gets in our craw because, to be honest (heh), we could care less about these mystical abilities in the sport of candor. Great—you’ve succeeded at being honest (though not really). How about now, you sharpen your skills at not losing billions upon billions of fucking dollars, which, not sure if anyone ever made this clear, is actually your main goal. Do that and your reward will be that you can tell as many lies as you want. Like this one: “Bear Stearns Seeing the Start Of a Rebound,” Executives Say. Yeah, that felt good.
Banks' Candor Makes Street Suspicious [WSJ]


How Can Wall Street Feel Alive Again?

As some of you may recall, there was a time not too long ago when you could work on Wall Street and be compensated in a way that made you feel special. Appreciated. Loved. Eight, nine, ten-figures of love. Now, obviously, not so much. But that is not what's eating the industry's most fragile spirits of late. They are fine taking pay cuts. They could care less about the money. What they're not fine with is having the rush, the intensity, the adrenaline-pumping fear that comes with, say, putting on a trade in which maybe the firm will make $1 billion or maybe it'll lose $10 billion, WHO KNOWS, IT'S ALL RELATIVE, I CAN'T FEEL MY LEGS, THAT'S WHAT MAKES IT SO EXCITING taken away from them. Take Sean George. He used to spend his days destroying company property and now, thanks to financial regulation, has had to get his kicks elsewhere. Sean George kneeled in the Church of St. Paul the Apostle in Manhattan. He wasn’t praying. A gash below his right brow bled into his eye and down his nose before a knee to his groin sent him to the floor. George, 39, head of credit-derivatives trading at Jefferies, was making his Muay Thai debut at the church June 22 in a sport that allows kicking, elbowing and kneeing. His eye was swelling shut by the time he lost in a split decision. It was the happiest he’s been all year, he said. “Right now at work I’m making less risk decisions -- and I enjoy taking risks,” George, who headed investment-grade credit-default-swap trading at Deutsche Bank AG before he joined Jefferies last year, said in an interview. “If you’re in it for the game and the fight, the game’s over and the fight’s over.” Risk is what drew George and the colleagues he respects to Wall Street, he said. He could bring in millions of dollars in a single month at his peak, and trading was so intense that during one credit-default-swap deal he smashed a phone against his desk, sending part of it three rows away, “one of the records for the best break,” he said. Ethan Garber's lost that tingly feeling in his plums. “There’s no sexiness, there’s no fun, there’s no intellectual intrigue, either,” said Ethan Garber, who ran proprietary credit-arbitrage portfolios for Credit Suisse Group AG and Bear Stearns Cos. “A lot of my friends who actually lingered for the last four years are all now getting fired anyway,” said Garber, 45, currently CEO of IdleAir, a Knoxville, Tennessee-based firm that provides electricity at truck stops. “The air is taken out.” Robert McTamaney has been reduced to doing his best impression of a whiskey-swilling, cigar-chomping newspaper man from the 1940's, who we assume addressed Bloomberg's Max Abelson as "toots" here. “The socks are higher, the skirts are longer,” said McTamaney, who helped run Goldman Sachs’s equities- trading business in Asia. “It’s like styles: They change, and you’ve got to change with it or be left behind.” Former King Street Capital and Bank of America trader Sam Polk isn't gonna lie, the worst part of Wall Street 2.0 is not being able to feel like a god by dropping $10,000 for bottle service on Wednesday nights, and sometimes even Thursdays. “You could be a 20-something trader three years out of school, able to go to any restaurant or club or ballgame on any night that you wanted, and it was totally paid for,” he said. “It was a tremendous feeling of power.” Michael Meyer is dying a slow, painful death. “The light at the end of the tunnel is dim,” said Meyer, now co-head of sales and trading at New York investment bank Seaport Group. Clearly, it's not pretty. But here at Dealbreaker we're about offering solutions, not whining about problems. How can these guys and girls replicate the feelings they once got by taking on risk on the job, if, unlike Sean George, getting kicked in the balls is not their thing? Drinking the carton of milk in the break room that's been sitting out for two days, telling the boss's wife it looks like she's gained a couple pounds, having unprotected sex with a junkie, shouting "You go girl!" at yourself in spin class after being kindly told to "Shut the fuck up" or else, and leaving dirty dishes in the sink all seem like good jumping off points but we can do better. These people need our help. Bloodied Trader Pines For Risk As Wall Street Retreats [Bloomberg]