The latest crisis hit Wall Street exposed a huge rift between how Wall Street bankers see their work and how the rest of us see them. It came up early on in the question of "retention bonuses" at the firms that failed because their existing managers bungled so badly. "We need to retain these skilled people," they said, "or we'll never be able to recover." Skilled? And given that the whole financial sector was in the midst of a crisis, who was going to hire them if they wanted to leave? The bankers see themselves as the possessors of a special, arcane knowledge that is vital to the whole world, and that justifies paying them whatever their firms can afford to pay. The notion that they are actually incompetent is not so much painful to them as inconceivable.
The same weird conceptual gulf was on display Wednesday before the Financial Crisis Inquiry Commission, set up by Congress to investigate the collapse and recommend new regulations. Not one of the four banking tycoons being questioned said a single thing about serious problems. Perhaps there were a few mistakes, but mainly they saw the crisis as either a sort of natural catastrophe -- "a hundred-year storm," as Lloyd Blankfein of Goldman Sachs put it -- or else an inevitable byproduct of financial creativity. "These things happen every five to seven years," said Jamie Dimon of JPMorgan Chase. They also insisted over and over that they had already been punished for their part in the catastrophe, in the form of losses suffered by their banks, but given that these men are still in their same jobs and stand to make hundreds of millions this year, the rest of us can perhaps be forgiven for not noticing much punishment.
Collectively, the people who run Wall Street have gone insane. We are going to have to write much more stringent regulations to control their mad behavior, and as long as they insist that they did nothing wrong, they will have nothing to contribute to the process.