Levine on Wall Street: Larry Summers, Bob Diamond, Caroline Gorman
Larry Summers didn't want that job anyway
For months now everyone has assumed the next Fed chair would be either Larry Summers, President Barack Obama's preferred candidate, or Janet Yellen, everyone else's preferred candidate. Yesterday Summers withdrew his name from consideration. The classy approach here would be:
Summers: I'm dropping out.
Obama: Keep that under your hat for a few days.
Obama: *announces Yellen's appointment*
They took the other approach. Here you can read Summers's letter to the president withdrawing his name, which is not long on false or other humility. It is far from obvious that Yellen will now actually be appointed but markets seem happy anyway.
Bob Diamond doesn't like too-big-to-fail banking
The former chief executive officer of Barclays is not the first former big-bank CEO to go on record as being against too big to fail. Actually I am not aware of any former bank CEOs going on record as being in favor of too big to fail, though give it time. But Diamond's Financial Times op-ed article doesn't call for a breakup of too-big-to-fail banks, as for example former Citigroup CEO Sandy Weill did. Rather, Diamond wants to solve too-big-to-fail through the mechanisms regulators are already using -- orderly resolution regimes for banks that get into trouble, and capital requirements to keep them out of trouble. The thrust of his argument is that the rules -- resolution rules, capital rules, and baking-safety miscellanea like the Volcker Rule -- should be consistent globally, and that " their effectiveness must be measured before new proposals are introduced." Diamond certainly isn't the first big bank CEO, current or former, to call for globally consistent, take-it-slow, no-drastic-steps regulation, though he might be the first to slap the headline "'Too big to fail' is still a threat to the financial system" on that very conventional position.
Sandler O'Neill does
People who worry about too-big-to-fail banks sometimes reminisce fondly about the olden days when investment banks were private partnerships owned by their employees, who had unlimited liability if things went wrong. This weekend DealBook profiled boutique financial-institutions-focused investment bank Sandler O'Neill, which is a private partnership (albeit a limited partnership that is ~40 percent owned by private equity firms), and which provides some support for that theory: "Sandler has never had a quarterly loss" and "has been fined by regulators just three times in its 25-year history," which is low for an investment bank. But what the Sandler crew lack in risk-taking they more than make up for in old-timey Wall Street quirkiness. There is a golf-mad, cigar-smoking autocratic shouty CEO! There is a fierce rivalry with Keefe, Bruyette & Woods, the other boutique financial-institutions bank: "Even today, John G. Duffy, vice chairman of Keefe, says Sandler calls attendees at Keefe's annual banking conference, offering tee times at high-end golf clubs in the hope that they will spend less time at the conference." Large-scale corporate banks don't just risk blowing up the global economy; they also risk losing touch with this sort of, I dunno, Wall Street heritage, for good or ill. But it's alive and well at Sandler.
The value of a liberal arts degree
I loved this New York Times Magazine article about how Wake Forest University is trying to help students translate their degrees in history or whatever into jobs. Most schools do this by having their professors deliver vacuous speeches and op-ed articles about how a liberal arts education Teaches You How To Think Critically. Wake is doing it by having career services people actually intervene in classes to make sure that they contain plenty of teachable moments about Teamwork and Leadership and otherwise map directly onto career-skills talking points. Which seems like a more rational approach than the op-eds? But it also creeps some people out, including both humanities professors and a Boston Consulting Group partner quoted saying of his interviews these days, "You think you're talking to a 20-year-old who should have bright ideas and enthusiasm, and they can't get out of the mode of: 'What are the words I'm supposed to use in this conversation?'"
It's hard to get noticed as a young singer-songwriter these days
It is somewhat easier if your father is the CEO of Morgan Stanley, but there are tradeoffs.
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Matthew S Levine at firstname.lastname@example.org