Several of you have forwarded to me this New York magazine story about an elite Wall Street fraternity, Kappa Beta Phi. Author Kevin Roose infiltrated the group’s ultraprivate banquet, and brings back the report. Excerpts:
It was January 2012, and [billionaire investor Wilbur] Ross, wearing a tuxedo and purple velvet moccasins embroidered with the fraternity’s Greek letters, was standing at the dais of the St. Regis Hotel ballroom, welcoming a crowd of two hundred wealthy and famous Wall Street figures to the Kappa Beta Phi dinner. Ross, the leader (or “Grand Swipe”) of the fraternity, was preparing to invite 21 new members — “neophytes,” as the group called them — to join its exclusive ranks.
Looking up at him from an elegant dinner of rack of lamb and foie gras were many of the most famous investors in the world, including executives from nearly every too-big-to-fail bank, private equity megafirm, and major hedge fund. AIG CEO Bob Benmosche was there, as were Wall Street superlawyer Marty Lipton and Alan “Ace” Greenberg, the former chairman of Bear Stearns. And those were just the returning members. Among the neophytes were hedge fund billionaire and major Obama donor Marc Lasry and Joe Reece, a high-ranking dealmaker at Credit Suisse. All told, enough wealth and power was concentrated in the St. Regis that night that if you had dropped a bomb on the roof, global finance as we know it might have ceased to exist.
Here’s the full Kappa Beta Phi membership list. After recording some of the proceeds on his iPhone — you can see them attached to the original story — Roose was discovered as an infiltrator, and thrown out. He thought about what he had just seen:
As I walked through the streets of midtown in my ill-fitting tuxedo, I thought about the implications of what I’d just seen.
The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.
The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.
Read the whole thing — and buy Kevin Roose’s book, if you like. It’s called Young Money, and it’s about the culture of young Wall Streeters. Here’s a Business Insider interview with Roose about what he learned from spending so much time around young bankers. As Roose says in the New York piece excerpted from his book, perhaps the saddest thing about the old Wall Streeters he spied on at the St. Regis is that they used to be young once, and idealistic. And now they were just pigs. From a Bloomberg Businessweek review of the book:
Some of Roose’s other characters burn out on the 110-hour workweeks—one defines a “banker nine-to-five” as 9 a.m. to 5 a.m. the next day. They show signs of depression, gain “Seamless belly weight” from having dinner delivered to their desks every night, suffer job-induced breakups, and become cynical in ways that threaten not to heal. One analyst suspects his long hours are a factor when he contracts a rare autoimmune disease. The last book I read with characters this miserable was a novel set in North Korea.
As they vent—and Roose listens to enough of their psychological problems that I hope he charged a co-pay—the eight informants give increasingly knowing takes on Wall Street. High finance isn’t moral or immoral, the young bankers learn. “What Wall Street was, I heard over and over, was completely amoral,” Roose writes. Often a deal will have some positive benefit to society; often it won’t. Either way it’s a coincidence.
When I first started reading Roose’s story in New York, I thought that he was overstating matters. What do I care if a bunch of stuffed shirts want to go to a hotel ballroom, dine well, and make tasteless and unfunny jokes? I don’t expect these guys (and gals) to be saints. These pigs-at-the-trough stories are easy to do. But the further I went into the story, the more I realized that these are not good men and women. They really aren’t — and they hold immense power and influence in our society. Aside from a moral compass, they lack a sense of honor.
Many of you readers roll your eyes when I talk on this blog about shame and honor, because you usually associate it with what you regard as sexual prudery. You’re wrong about that. This story shows what happens when elites discard the idea of honor. Had they any honor, they would have understood that the same people they make fun of — the government, and the people who fund that government — saved their sorry asses in the crash. They ought to have a sense of humility over what they did to this country, and what they, as Americans, owe to this country for making their own wealth-gaining possible — and for preventing most of them from going down the toilet in the crash. A decent elite Wall Street banker would have been ashamed to have been at that dinner.
What a despicable crew. As far as I’m concerned, no conservatism worthy of my allegiance will defend these people and their privileges and depredations. I have a couple of Wall Street banker friends, and they’re very fine men who work hard and honorably. But they would tell you that for the most part, they labor in whorehouses.