Wed Apr 18, 2012, 05:29 PM
WillyT (72,631 posts)
WOW... First Citigroup, Now THIS... Something's Afoot On Wall Street...
Morgan Stanley CEO's Lonely Quest To Restore Faith In Wall Street
By William D. Cohan - Bloomberg
Posted: 04/17/2012 11:30 am Updated: 04/17/2012 11:30 am
There has been a noticeable dearth of leadership on Wall Street after the financial crisis. Where are the senior executives willing to explain to the American people how and why the financial industry’s behavior got our economy into so much trouble and why that behavior needs to change if there is to be any hope of restoring the public’s confidence in our capital markets? Without that restored faith, you can pretty much forget about any economic recovery anytime soon.
Instead of rising to the occasion, Wall Street’s purported top rung -- Lloyd Blankfein, the chief executive officer of Goldman Sachs Group Inc. (GS); and Jamie Dimon, CEO of JPMorgan Chase & Co. (JPM) -- have been too busy either defending their own indefensible actions leading up to the crisis (Blankfein) or complaining about how new regulations are impeding profitability (Dimon) to give any thought to fundamentally changing the way Wall Street does business. So far, they have shown the opposite of leadership: blatant self-interest.
Fortunately, as Aristotle taught us, nature abhors a vacuum. And into the leadership breach has quietly stepped the Australian-born James Gorman, the 53-year-old former McKinsey & Co. consultant and Merrill Lynch & Co. executive who has been the CEO of Morgan Stanley since 2010 and both chairman and CEO since the beginning of the year. In his unassuming way, Gorman has come out swinging.
He started a buzz at the World Economic Forum in Davos in January, when Bloomberg Television’s Erik Schatzker asked him to explain why Morgan Stanley had taken the lead by instituting compensation clawbacks and deferrals and by capping cash payouts at $125,000 a year. Gorman said he would tell the following to employees who failed to grasp the logic of his decision. “You’re naive. Read the newspaper, No. 1,” he said. “No. 2, if you put your compensation in a one-year context to define your overall level of happiness, you have a problem which is much bigger than the job. And No. 3, if you’re really unhappy, just leave. I mean, life’s too short.” For good measure, he added, “The world has changed and the banking industry has gone through a fundamental change, and we have to readjust.”
Exactly. Unlike Blankfein and Dimon, Gorman understands that true leadership means perceiving the world as it really is -- and dealing with it -- not wishing it were something that it no longer is.
Gorman expanded on this theme last week during an appearance on the “Charlie Rose” show. He said it was essential for Morgan Stanley (MS) to get back to helping its clients solve their problems, rather than focusing on ways to make a big financial score.
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Replies to this discussion thread
WOW... First Citigroup, Now THIS... Something's Afoot On Wall Street... (Original post)
Response to WillyT (Original post)
Wed Apr 18, 2012, 05:31 PM
underpants (123,020 posts)
1. Wall Street has become dependent on "dumb money" (401K's and not-Wall Streeters) .
they expanded like the NHL and NASCAR expecting the money from the sky to keep falling in.
Response to underpants (Reply #1)
Wed Apr 18, 2012, 06:08 PM
WillyT (72,631 posts)
2. I Hear Ya... But BOTH Of These Developments Are Probably Causing Shock Waves On The Street...
For shareholders to vote down an executive pay package is almost unheard of in modern history, and "activist investors" is a LOVELY term...
And Gorman capping bonuses, threatening "clawback" for under performance, instituting a culture that works for their clients instead of for themselves (the Big Score), and... telling his employees that if they don't like the new rules they are free to leave...
are both refreshing, and certainly signs of hope.