The fundamental divide in opinion regarding our financial system is: Are the people running "large integrated financial groups" hapless fools, buffeted by forces beyond their comprehension and control; or do they know exactly how to ensure they get the upside and the awful, sickening downside is borne by society--including through high unemployment?
Some light was shed on this issue by Monday’s meeting at the White House or, more specifically, by who didn’t turn up and why. Of the dozen bank CEOs invited, Vikram Pandit was supposedly busy trying to extricate Citi from TARP and asked Dick Parsons to attend instead--a wimpy but smart move, as Parsons is close to the President.
However, three executives--Lloyd Blankfein, John Mack, and Dick Parsons himself--did not show up in person and had to join by conference call. Their excuse was bad weather (fog) in DC meant that they were unable to fly in; Mack was quoted as saying, regarding their absence, "It’s certainly not for a lack of effort."
But really there are three possible interpretations:
(1) Pure bad luck. This happens to us all; even the best laid plans are for nought sometimes.
(2) Bad management by the executives and their logistic teams--who are ordinarily the best of the best.
(3) Wilful defiance of the government which, while not premeditated in this instance, means that the executives grabbed an opportunity to show disrespect and relative power.
We don’t know all the facts of how these executives planned to travel or exactly their routes on Monday morning--and I would be happy to be corrected on any details--but here’s what we can readily construct from the public record. (We do know they didn’t try to come down Sunday evening, because that would have worked.)
President Obama held a press briefing after his meeting with the bankers, starting at 12:36 p.m. The meeting itself lasted a bit over an hour. As we all like to start meetings, particularly important meetings, on round numbers, it seems fair to assume that the appointment at the White House was for 11 a.m. Even VIPs need some time to clear security, so let’s assume that the CEOs were asked to arrive by 10:30 a.m.
All three of the missing bankers were apparently coming from New York. There are many ways to make the flight, but US Airways is among the most reliable--flying from LaGuardia to National Airport, every hour on the hour, from 6 a.m. The flight takes just over an hour, it’s easier to get to LaGuardia from Manhattan before 7 a.m., and delays are common at LGA as air traffic builds up over the east coast. Any conservative banker, who really did not want to be the only person missing a meeting with the president, would aim for the 7 a.m. shuttle--putting him on the tarmac in DC at 8:10 a.m., with a comfortable time cushion (and an opportunity to have coffee with his chief lobbyist).
There was thick fog in DC on Monday morning, but this did not descend in a matter of seconds during rush hour--it was evident already by 5 a.m. Corporate jets could get through (Jamie Dimon came that way), but let’s limit ourselves to public transportation--remember that the Acela train service is not generally slowed by fog and on Monday ran almost on time.
So the question becomes: At what point did the CEO realize that there was a fog issue, and was there still time to come by train? The Acela leaves Penn Station every hour on the hour, with the 7 a.m. train getting to DC at 9:49 a.m. and the 8 a.m. arriving at 10:49 a.m.
We can rule out explanation #1 (bad luck). These are experienced people who travel all the time, with first class support staff, and they are supposed to be the best in the timely information business. These executives don’t generally wander around airports trying to puzzle out flight information displays.
Is explanation #2 plausible (bad management)? It is possible that at least one bank team wasn’t paying close attention and sent their boss to the airport for the 7 a.m. shuttle (although what are the odds that this would happen for 3 of our biggest and most dangerous banks?) An experienced traveller, who has checked in on-line, might aim to arrive at the airport at 6:30 a.m.--to discover the delays already in progress.
So then the question becomes: Can you get from LaGuardia to Penn station in 90 minutes early on a Monday morning? My experience is: Yes (if any New Yorkers know differently or if anyone saw John Mack pushing desperately through the crowds at Penn Station just before 8 a.m. Monday, please post or send that information in).
The implication is inescapable. These three bank executives did not plan on missing the meeting but, once they learned of the fog delay, they did not rush to the train station--which is what any other business traveller with a pressing commitment would have done.
These three executives--who were, in some sense, the primary audience for the president’s remarks--did not really want to attend. They do not see the need to show deference or even respect. They won big from the crisis and that is now behind them. As they move on (and up), there is nothing--in their view--that the executive branch can do to hold them back.
Even so, it wasn’t polite to behave in this fashion; showing disrespect to the president of the United States is always objectionable. But there is a pattern of behavior here, reflecting a deeper culture on Wall Street. This arrogance will eventually prove their undoing--no self-respecting White House can let this kind of repeated insult pass unaddressed.