Being married to a psychiatrist, there just happened to be a copy of the DSM IV in the house. I grabbed it and, on a hunch, turned to the section on personality disorders, where antisocial personality disorder caught my eye first.
Antisocial personality disorder is characterized by a lack of regard for the moral or legal standards in the local culture. There is a marked inability to get along with others or abide by societal rules. Individuals with this disorder are sometimes called psychopaths or sociopaths.
Diagnostic Criteria ( DSM-IVâ„¢ ) made easy.
1. Since the age of fifteen there has been a disregard for and violation of the right’s of others, those right’s considered normal by the local culture, as indicated by at least three of the following:A. Repeated acts that could lead to arrest.
B. Conning for pleasure or profit, repeated lying, or the use of aliases.
C. Failure to plan ahead or being impulsive.
D. Repeated assaults on others.
E. Reckless when it comes to their or others safety.
F. Poor work behavior or failure to honor financial obligations.
G. Rationalizing the pain they inflict on others.
2. At least eighteen years in age.
3. Evidence of a Conduct Disorder, with its onset before the age of fifteen.
4. Symptoms not due to another mental disorder.
I’m not a psychiatrist or a psychologist — but a year ago a freelance writing project required me to do a lot of research on serial killers; perhaps the best and most extreme examples of sociopathy — so at best, this is an armchair diagnosis, but it’s not that far off. Think about it. Repeated acts that could lead to arrest? Well, Fuld has been subpoenaed. Then there was the arrests of two former Bear Stearns executives, and the arrests of more than 400 real estates brokers on fraud charges.
Conning for pleasure and profit? Well, isn’t that the very definition of how business was apparently done on Wall Street before house of cards finally collapsed? Failure to plan ahead? Well, isn’t that the definition of Ponzi schemers who have to know that the house of cards will fall, but who don’t let it stop them from scheming? Reckless with other people’s safety? Well, how many people lost jobs, homes, pensions and any semblance of economic security as a result of the economic downturn?
But I got tripped up by “Symptoms not due to another mental disorder.” At least until I turned to the entry for Narcissistic Personality disorder.
Narcissistic personality is characterized by behavior or a fantasy of grandiosity, a lack of empathy and a need to be admired by others. Narcissistic personality has a pathological unrealistic or inflated sense of self-importance, has an inability to see the viewpoints of others, and is hypersensitive to the opinions of others.
ONSET: Early adulthood and with a variety of contexts.
Diagnostic Criteria ( DSM-IVâ„¢ ) made easy.
1. Behavior or a fantasy of grandiosity, a lack of empathy and a need to be admired by others. As indicated by at least five of the following:a) Grandiose sense of self-importance.
b) Fantasies of and preoccupied with beauty, brilliance, ideal love, power, or unlimited success.
c) A belief of being special and unique and can only be understood or a need to associate with people of high status.
d) A need for excessive admiration.
e) An unreasonable expectation of being treated with favor or excepting an automatic compliance to her / his wishes.
f) Will use others to achieve her / his goals.
g) Lacks empathy.
h) Believes others are envious of her / him or is envious of others.
i) Contemptuous or haughty attitudes / behaviors.
Again, it’s not hard to identify the traits above on Wall Street. (They are by no means exclusive to bankers, brokers, etc.,though.) You can hear it in the explanations of why people on Wall Street deserve their bonuses, no matter what’s going on in the “real econom” or how much of a role the financial sector played in the economic pain that has trickled down from Wall Street, if the prosperity of Wall Streeters’ hasn’t . You can see it in both the kind of grandiosity that results in a shopping list like John Thain’s (whose decorator the Obama’s have hired for the White House, but only to the tune of about $100,000), and arguments that Thain deserved his bonuses and was right about the Merrill Lynch bonuses.
And how many people were told that this much and worse would happen if something wasn’t done, but did nothing to stop it or even minimize the damage? Like I said earlier, you either have to not know what’s going on or you have to not care, even after several people have warned you. That’s the passive approach, but there’s a more active approach.
John Devaney, a bond trader who became a symbol of hedge fund excess and collapse hit “rock bottom” with the subprime crash — which, for him, meant losing about $100 million of his personal wealth, selling a mansion in Key Biscayne, Florida, and artwork by Renoire and Cezanne, as well as his private jet and his yacht. But in 2007 he was riding high, trading in subprime mortgages that he said he hated and “hoped would explode”, and mortgaged backed securities of which he said a consumer would have to be an “idiot” to buy.
The housing boom was good to John Devaney. Really good. He owns a Rolls-Royce, a Gulfstream Jet, a 12,000-square-foot mansion in Key Biscayne and a 143-foot yacht, as well as a few Renoirs and a valuable 1823 reproduction of the Declaration of Independence.
Devaney’s not a developer, and he’s certainly not a flipper. The 36-year-old CEO of United Capital Markets is a bond trader. And one of his specialties is buying and selling bonds that are backed by the mortgage payments of ordinary homeowners.
Option ARMs? Devaney loves ’em. “The consumer has to be an idiot to take on those loans,” he says. “But it has been one of our best-performing investments.”
Devaney’s not out to get people into bad loans – or into good ones. He just makes bets on how many people will repay and when. Still, the $5.7 trillion mortgage-backed-securities market had a key role in today’s housing mess.
Are they a disaster for many people? Sure, but they are (or were) one of his firm’s “best-performing investments.” So what’s he got to worry about? After all, he’s supposed to make money for his shareholders, and that all he has to be concerned about. If he’s trading in something that spelled ruin for those who bought it without knowing any better, well, that’s their problem, not his. Right?
Actually, yes. That’s right. It wasn’t his problem, or their problem. It couldn’t have been, because — long before “bailout” became word of the year — we have enabled, subsidized and even coddled the wealthy.
Last week, voters were so infuriated by the idea of spending $700 billion dollars to bail out rich Wall Street bankers that Congress nearly killed the plan. Given the impact on Main Street, it was a dangerous target to strike. But the anger was well placed, and Washington is a target-rich environment.
Taxpayers subsidize Wall Street and other moneyed interests in literally thousands of ways, with all sorts of outrageous consequences. We couldn’t list them all if we filled this space 10 times over, so you’ll find below a sampling of just four that lend a sense of just how ridiculous the situation is. We picked them based on a simple premise: Average taxpayers should not be asked to send money to people of much greater means.
We’re clearly now subsidizing their million dollar salaries and bonuses, even as the economic pain spreads. We subsidized them with tax breaks, like capital gains tax cuts, so that billionaires now have a lower tax rate than most of the rest of us. We subsidized them with corporate tax breaks and loopholes.
The question is why do we subsidize these people? The answer that they are the drivers of the economy doesn’t fly anymore, since they’ve driven it into the ground. And whether they dubbed themselves “masters of the universe” or we did, it turns out they are nowhere close to Ayn Rand’s “Atlas”. They do not carry the world on their shoulders, though they may be “holding it up” in quite a different sense these day. Now it’s clear that we are carrying them on our shoulders.
And even in the midst of an economic downspiral, we may continue to do so, due to various strains of “economic Stockholm syndrome.”
On Olbermann a few minutes ago (that basement classroom with the heavy paper over the windows and camera sure has come in handy lately!) a phrase popped out of my mouth: â€œStockholm Syndromeâ€, with regard to the bailout rescue.
Hereâ€™s the thing: itâ€™s very hard for Congress to originate complex financial rescues, so itâ€™s normally up to the executive to put things together. Unfortunately, Paulson came up with an awful plan. Ideally, the Dems would have ripped the thing up and started over, but that was never realistic. So instead they made it significantly better, but still building on the original, misconceived structure; it became better than nothing, but not good.
And then it failed in the House, so the Senate has larded it up, with stuff like SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
I think that Congressional leaders know that itâ€™s a bad bill, but feel compelled to defend it, because theyâ€™re (rightly) scared of the financial consequences of a second rejection. And to some extent economists like myself are in the same position; I think I called it the â€œhold your nose caucus.â€
So am I for the bill? Yuk, phooey, I guess so. And Iâ€™m very angry at Paulson for putting us in this position.
There’s even more of a reason to be angry. Didn’t we already have a discussion about CEO salaries, when the bailout was up for a vote? Sure. Congress weight the issue, and even brought a few executives in for a strong talking-to. But that was it. The CEO compensation measures in the bailout were a farce.
We knew in September that there were no restrictions on compensation in the bailout, other than the discretion of banks and institutions whose best thinking landed them in need of a bailout in the first place (and some, but not enough of them, in danger of indictment). And the government just … hoped … that they would do the right thing this time.
It is almost impossible to believe that there was any malfeasance in the decision that left the bonus management of the highest performing employees at these companies to the boards and senior managers. But, the government elected to avoid getting into a series of disputes over how thousands of people should be paid. Federal regulators chose to hope that the banks would use discretion when they made compensation decisions during this unprecedented credit crisis.
The government walked away from the entire matter because it was complex and time consuming. This is the same reason that the Treasury Department wrote checks to the banks instead of buying their toxic assets even though Congress had been told that the TARP funds would only be used to buy toxic assets. It was quicker and easier to just give the banks money because of the worsening crisis.
Anyone who finds it “impossible to believe that there was any malfeasance,” in the decision to leave bonuses to the discretion of the same people who presided over the the goings-on that got us here either suffers a terminal lack of imagination or has simply been lulled into believing that such well-spoken, well-dressed, well-intentioned, and well-off people couldn’t possibly fail to exercise some discretion and restraint. After all, look at where we are now.
Or they’ve been fooled by the mask of normalcy that serves sociopaths so well. So, regulators relied on “hope” that banks would act with discretion. Banks whose business decisions and pratices helped this happen and left the in need of rescue? Woudn’t their judgement be suspect already?â€¨â€¨The government didn’t just “walk away.” Right? Remember the CEO salary caps that were supposed to be part of the bailout? They knew all along that it wouldn’t fly.
And by “they” I mean the “banksters” and their accomplices, who met via conference call for members of the Securities Industry and Financial Markets Association on the night of the bailout vote. It was a privileged briefing, not meant for the ears of the uninitiated, where members were reassured that the executive compensation measures in the bill were a joke that didn’t apply to them or to existing contracts. No one else was supposed to know.
It was bloggers, by the way, who broke the news that the CEO salary restrictions in the TARP bill were toothless. It was bloggers who infiltrated today’s equivalent of a smokey backroom and alerted us to what was going on. For all the good it did.
With a bit more smarts, slightly less bloodlust, a new suit and and updated haircut, Ted Bundy — one of the best known, most charming sociopaths — might have done well on today’s Wall Street, and made a killing of a different sort. His “mask of normalcy” worked so well that his victims only realized it was a mask when it slipped off, well out of public view. By then, he didn’t need it anymore. He was in control.
That’s the thing about psychopaths. They don’t care about right, wrong or the consequences. Period. They aren’t going to do right this time just because they got caught last time. And certainly not if they get rewarded. And who can say that they haven’t been rewarded?
The $500,000 CEO pay cap announced by the president, in the wake of bailed out firms handing out $18 billion in bonuses, have one huge catch. They’re not retroactive. And Sen. McCaskill’s attempt to make them retroactive was quietly removed from the stimulus bill. Just as before, there’s a loophole big enough for all of the companies that have already been bailed out to fit through, provided they don’t end up getting back in line for more bailout money.
And, true to form, quite a few of them want to return the money they’ve received, saying they didn’t really need it in the first place, and — as Josh Marshall put it — implying that they wouldn’t be giving it back if we hadn’t treated it so shabbily.
What did we do? Make some noise about consequences? Sure, but they were empty noise, and the Wall Streeters know it.
A true narcissist will react with hostility when faced with criticism or anything than unconditional acceptance and admiration. Beneath the surface of that reaction, the sociopath — who doesn’t care about the consequences of his actions for anyone but himself — knows that he won’t have to face any consequences, and is emboldened by two obvious realities: Not only will he get away with it, but he’ll be rewarded.
We may be far too easily frightened or fooled to do much else.