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Tue Jan 3, 2012, 02:03 PM

In BLOOMBERG today: This Is How Wall Street Psychopaths Caused The Financial Crisis

And on Bloomberg TV!

From Business Insider:

Bloomberg View columnist Bill Cohan has stumbled on a fascinating academic paper from British scholar Clive Boddy on corporate psychopaths and how they may have caused the financial crisis.


Interestingly enough, Boddy notes that psychopaths are specially able to thrive in Wall Street firms because of its very nature—filled with chaos, high turnover and rapid change.

Psychopaths are then able to use their charisma to appear like key leaders within the frenetic atmosphere of Wall Street, yet at the same time remain ruthless and calculating.

On Bloomberg TV this morning, Cohan also added that this kind of work atmosphere has only been prevalent recently as financial institutions have gone public. Back in the days of private partnerships, "there was a collegial nature and... everybody knew everyone else and you couldn't possibly get to the top if you were a crazy person," he said.


(The Business Insider article has a link to a PDF of Boddy's full Business Ethics article. I wasn't able to create my own link, so just go to the above link and use the one there if you want to read Boddy's article -- snips are provided below.)


From Cohan's Bloomberg article:

They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”

Boddy doesn’t name names, but the type of personality he describes is recognizable to all from the financial crisis.

He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk away from the economic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”

<snip>

In an e-mail correspondence with me, he said his article has been warmly received and has been downloaded 9,440 times in the past 90 days. “Apparently this is a lot for an academic article and it is more than the next four most-downloaded papers combined,” he wrote.


Boddy is no fly-by-night asshole jumping in to offer his best guess about these corporate psychopaths.

CLIVE BODDY has been studying the effects of Corporate Psychopaths as experienced by hundreds of managers over the past five years. This has included collecting information on the perceived levels of incidence of experiencing Corporate Psychopaths, collecting reports of critical incidents involving potential Corporate Psychopaths and more recently, collecting data on the effects of Corporate Psychopaths on organisational outcomes.


His book is titled: Corporate Psychopaths: Organizational Destroyers.


From Boddy's paper in The Journal of Business Ethics (link in the Business Insider article):

<snip>

Psychologists have argued that Corporate Psy- chopaths within organizations may be singled out for rapid promotion because of their polish, charm, and cool decisiveness. Expert commentators on the rise of Corporate Psychopaths within modern corpora- tions have also hypothesized that they are more likely to be found at the top of current organisations than at the bottom. Further, that if this is the case, then this phenomenon will have dire consequences for the organisations concerned and for the societies in which those organisations are based. Since this prediction of dire consequences was made the Global Financial Crisis has come about. Research by Babiak and Hare in the USA, Board and Fritzon in the UK and in Australia has shown that psychopaths are indeed to be found at greater levels of incidence at senior levels of organisations than they are at junior levels (Boddy et al., 2010a). There is also some evidence that they may tend to join some types of organisations rather than others and that, for example, large financial organisations may be attractive to them because of the potential rewards on offer in these organizations (Boddy, 2010a).

<snip>

These Corporate Psychopaths are charming indi- viduals who have been able to enter modern cor- porations and other organisations and rise quickly and relatively unnoticed within them because of the relatively chaotic nature of the modern corporation. This corporate nature is characterized by rapid change, constant renewal and quite a rapid turnover of key personnel. These changing conditions make Corporate Psychopaths hard to spot because constant movement makes their behaviour invisible and combined with their extroverted personal charisma and charm, this makes them appear normal and even to be ideal leaders.

The knowledge that Corporate Psychopaths are to be found at the top of organisations and seem to favour working with other people’s money in large financial organisations has in turn, led to the devel- opment of the Corporate Psychopaths Theory of the Global Financial Crisis. The Corporate Psychopaths Theory of the Global Financial Crisis is that Cor- porate Psychopaths, rising to key senior positions within modern financial corporations, where they are able to influence the moral climate of the whole organisation and yield considerable power, have largely caused the crisis. In these senior corporate positions, the Corporate Psychopath’s single-minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other con- siderations has led to an abandonment of the old fashioned concept of noblesse oblige, equality, fair- ness, or of any real notion of corporate social responsibility.

<snip>

However, once corporate takeovers and mergers started to become commonplace and the resultant corporate changes started to accelerate, exacerbated by both globalisation and a rapidly changing tech- nological environment, then corporate stability be- gan to disintegrate. Jobs for life disappeared and not surprisingly employees’ commitment to their employers also lessened accordingly. Job switching first became acceptable and then even became common and employees increasingly found them- selves working for unfamiliar organisations and with other people that they did not really know very well. Rapid movements in key personnel between cor- porations compared to the relatively slower move- ments in organisational productivity and success made it increasingly difficult to identify corporate success with any particular manager. Failures were not noticed until too late and the offending man- agers had already moved on to better positions elsewhere. Successes could equally be claimed by those who had nothing to do with them. Success could thus be claimed by those with the loudest voice, the most influence and the best political skills. Corporate Psychopaths have these skills in abun- dance and use them with ruthless and calculated efficiency.


Needless to say, there are MANY of us who've been saying the same thing. It's just nice to see it in print and supported by research, in Bloomberg no less!



11 replies, 2160 views

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Always highlight: 10 newest replies | Replies posted after I mark a forum
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Arrow 11 replies Author Time Post
Reply In BLOOMBERG today: This Is How Wall Street Psychopaths Caused The Financial Crisis (Original post)
tpsbmam Jan 2012 OP
think Jan 2012 #1
SixthSense Jan 2012 #4
banned from Kos Jan 2012 #2
Octafish Jan 2012 #3
tabatha Jan 2012 #5
tpsbmam Jan 2012 #9
tabatha Jan 2012 #6
WhatsNext Jan 2012 #7
Frosty1 Jan 2012 #8
tpsbmam Jan 2012 #10
tblue37 Jan 2012 #11

Response to tpsbmam (Original post)

Tue Jan 3, 2012, 02:06 PM

1. So if we can't prosecute them can we have them committed?

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Response to think (Reply #1)

Tue Jan 3, 2012, 02:23 PM

4. We sure can prosecute

 

The number of actual black-letter of the law crimes that were committed were legion.

Anyone who tells you that they can't be prosecuted is either ignorant or has a vested interest in not seeing the crimes punished.

Send the DA to me who says there's no crime, I'll keep him busy for the rest of his natural life, piling on incontrovertible evidence of prosecutable criminal activity. Between fraud and bribery alone we could send thousands of people to prison... and at the really high levels, there is behavior that meets the strictest definition of treason.

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Response to tpsbmam (Original post)

Tue Jan 3, 2012, 02:14 PM

2. I can name some

 

Dick Fuld - Lehman Bros
Angelo Mozilo - Countrywide
Bernie Ebbers - Worldcom
Pat Skilling - Enron
Dennis Kozlowski - Tyco

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Response to tpsbmam (Original post)

Tue Jan 3, 2012, 02:14 PM

3. ''Control Fraud'' is how William K. Black puts it...

The Two Documents Everyone Should Read to Better Understand the Crisis

As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.1 When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

CONTINUED...

http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

PS: Thank you for the heads-up on Boddy, tpsbmam. It is great to see this making it to the mainstream (not that I don't think Michael Bloomberg would ever use his news organization to advance his own politco-economic agenda).

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Response to tpsbmam (Original post)

Tue Jan 3, 2012, 02:25 PM

5. Is Romney a corporate psychopath?

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Response to tabatha (Reply #5)

Tue Jan 3, 2012, 03:03 PM

9. Anyone who puts a loved family pet on the roof of the car and travels 12 hours with the poor animal

that way is going to fall into the psychopath category, IMO. One of the telling signs in children headed down scary psychopathic paths (possibly diagnosed with Conduct Disorder or Oppositional Defiant Disorder) is sadism/torturing animals. Hmmmm........


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Response to tpsbmam (Original post)

Tue Jan 3, 2012, 02:30 PM

6. Also, this would undermine the concept of unregulated, free market philosophy.

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Response to tpsbmam (Original post)

Tue Jan 3, 2012, 02:32 PM

7. Here's research I've been compiling since 2008.

Greed-by-all is the Ring Leader. The psychopaths were tools. There was collective collusion at all levels. Banks, Bernancke, Congress, etc.

Here is the well-cited proof that

AMERICA IS A CRIME SCENE

http://www.dailykos.com/story/2011/12/22/1047829/-Dear-Journalists:-Heres-Housing-Crime-Details-Why-Not-Report-the-Facts

Not one journalist is reporting the whole story, just snippets here and there.

The above, if you follow all the links, is quite complete. Pass it along to the journalists you know.

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Response to WhatsNext (Reply #7)

Tue Jan 3, 2012, 02:57 PM

8. Thank you for all your research on the mortgage scam

Well done!

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Response to WhatsNext (Reply #7)

Tue Jan 3, 2012, 03:04 PM

10. Excellent contribution to the thread. Thank you!

Passed the links along to others. Good work!

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Response to tpsbmam (Original post)

Tue Jan 3, 2012, 04:55 PM

11. Look at this passage:

Expert commentators on the rise of Corporate Psychopaths within modern corpora- tions have also hypothesized that they are more likely to be found at the top of current organisations than at the bottom. Further, that if this is the case, then this phenomenon will have dire consequences for the organisations concerned and for the societies in which those organisations are based.

Certainly "this phenomenon will have dire consequences for the . . . societies in which those organisations are based," and especailly so when the RW psychopaths on the USSC have ensured through Citizens United that corporations run by such psychopaths have even more power than ever before to use money to control elections in this country.

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