I wanted to write a book about bankers because finance seems to have replaced politics, with democracy beginning to feel like a system that allows voters to decide which politician gets to implement what “the markets” dictate.
Who are these people? That is what the Guardian wanted to know too, so they sent this complete outsider into the City; a Dutchman with no background in finance who could start at the beginning. My task: to find out what do bankers do all day – and how they live with themselves?
Over the course of more than two years, around 200 bankers, banking staff and financial workers in the City talked to me. They all volunteered on the condition of anonymity – there is a strictly policed code of silence in the City, and even a code of silence about this code of silence.
Looking back, I can’t help feeling a bit angry about the Hollywood portrayal of finance, with all the psychopathic “Greed is Good” ideologues cheating their way to the top. The truth about finance is far scarier: 40 years of technological change, globalisation and above all deregulation have conspired to create a system where bankers do not even have to be break the law to bring the world economy to its knees. It’s all legal, and my interviewees were actually rather nice people, normal almost and definitely not monsters. Yet the banks they were working for (“working at”, many corrected me) are certainly monstrous organisations.
Here is my top 10, for those wanting to know more about the new masters of our universe:
1. The Bonfire of the Vanities by Tom Wolfe
A marvellously well-written novel by one of the kings of journalism. This book gave us the term master of the universe, referring to the almost maniacally self-confident Wall Street bond trader Sherman McCoy. Most of my interviewees working in trading said they knew one or two colleagues like McCoy, but not more. Consider this book a pleasant hors d’oeuvre and read it not for its realistic portrayal but for fun, and to steel yourself for what is coming …
2. The Fountainhead by Ayn Rand
Bankers are not great readers, if only because many work every waking hour, forever fighting sleep deprivation. But it seems quite a few read The Fountainhead in college, deciding that this story – about a heroic individual fighting off mediocre altruists – was all the literature they would ever need. The amusing paradox is that elsewhere in finance bankers are often seen as exactly the kind of mediocre bureaucrats the hero in The Fountainhead despises. Those working in firms that can go bust, such as venture capital, private equity and hedge funds, scoff at “too big to fail” banks: capitalism without the possibility of default, they say, is like Catholicism without hell.
3. The Power of Yes by David Hare
This wonderful little play was Hare’s attempt to come to terms with the financial crash. Hare interviewed many of the protagonists but does not pretend to understand more than he does. A great introduction to the structural problems in finance; conflicts of interest and perverse incentives fostering hubris, short-termism, incompetence and, yes, greed.
4. Fool’s Gold by Gillian Tett
After David Hare’s play gives you enough confidence to think “hey, I can understand all this”, Tett offers a detailed case study of the crash. An anthropologist by training, she was among the first to see the danger in the lucrative complex financial products that were to bring the whole show down. She tells the story from the perspective of those who invented the products and who could not believe their eyes as competitors took their idea – which was actually quite good – and turned it into ever more exotic (and eventually toxic) products.
5. The Big Short by Michael Lewis
This is the same case study, only now about one professional investor who saw how dangerous the complex products were. Nobody wanted to believe him until it was too late (and he had made billions). If Michael Lewis were a footballer, his name would be Lionel Messi and reading him as a writer I feel like a defender at some second-rate football club getting nutmegged again and again.
After two case studies, it’s back to fiction with this portrayal of a friendship between two bankers whose lives are falling apart. One is a working-class immigrant and maths genius who never finds his place among the rich, the other a cushioned middle-class son of an academic couple. Their facile and easy self-justifications ring very true: yes, it was legal what they did with those complex instruments. But who paid for the lobbyists and donated so much campaign money to make it legal? A former banker himself, Rahman paints a highly realistic picture of what bankers are really like.
7. Capital and Whoops! by John Lanchester
If the representation of finance has suffered from a Wall Street bias, Lanchester has done his bit to restore balance. Capital is a panoramic novel about the effects of financialisation, in particular the continuing housing bubble in London. Lanchester knows his stuff, as he demonstrates in his non-fiction account of the crash, Whoops! If Tett offers a frog’s view from the ground up, Lanchester’s is the bird’s perspective. Incredibly, he manages to make some really good jokes while explaining this stuff. About finance. The bastard.
8. Shredded: Inside RBS, the Bank that Broke Britain by Ian Fraser
While the outside world concentrates on greed as the motive for bankers, Fraser demonstrates in this immaculate reconstruction how incompetence and hubris also played their part. A riveting read that made me almost grateful for not being British and therefore not on the hook for the debts that RBS saddled this country with.
9. Merchants of Greed by Philip Augar
A banker turned whistleblower, Augar analyses the dotcom bubble. Remember that one? What makes this book from 2005 so timely is just how similar the response from the banking lobby was after that scandal: lots of sorries, promises to “clean up the culture” followed by a stern warning that “the time for banker bashing is now over”. As Augar writes in his final chapter about a new crash or scandal: “On to the next one.”
10. After the Great Complacence by Howard Englen et al
Finally, the book that made me weep. It is the most incisive account I have found of the crash, which the authors consider “an elite debacle” akin to the Iraq invasion. The eight authors are all social scientists rather than economists, meaning that they prefer fieldwork and actual observations to mathematical models that bear little relation to reality. This is a book where the knife goes all the way to the bone. It will be very hard to read for those untrained in social science jargon. Still, this is the real stuff.
• Swimming With Sharks: My Journey into the World of the Bankers by Joris Luyendijk is published by Faber & Faber, priced £12.99. It is available from the Guardian bookshop for £6.99.
This article was written by Joris Luyendijk, for theguardian.com on Wednesday 11th November 2015 11.08 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010