Financial Services Update
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The big bankers on Wall Street like to be cool in public.As we said in New York, this is theirs Fool -The technology they use to win the trust of other participants in the financial market.
Therefore, it has been disturbing to see so many masters of the universe in recent months-JPMorgan Chase’s Jamie Dimon, David Solomon of Goldman Sachs, Morgan Stanley’s James Gorman -So openly worried that their employees need to return to the office.
Their manifesto is supported by noble emotions that emphasize the importance of guiding young employees, building cohesive teams, and promoting diversity. But their tone is different-even if it is not insensitive to concerns that staff are exhausted by the need for hours of commuting, they are also annoyed.
In fact, bank executives have more reasons to worry than they express. Working at home with others’ trillions of dollars is a risky experiment. Legal and regulatory risks are great. Bank bosses and their government regulators are eager to better understand this action is reasonable.
Charles Elson, a corporate governance expert at the University of Delaware, said: “In a more regulated industry, people will worry about the lack of control over the daily activities of their employees.” “You are more casual at home than in the office—except for you. My dog, no one looks at you.”
The difficulty for banks is that it takes more than just a smart dog to ensure that employees comply with the strict regulations of federal regulators. One example involves asking them to keep records of business communications for many years-even if the conversation takes place on a personal device, using messaging services such as WhatsApp.
JPMorgan Chase revealed in a report this month Government filing “Some of its regulatory agencies” have been asking whether electronic messages sent through channels not approved by the bank “compliance with record keeping requirements.” JPMorgan Chase stated that it “is cooperating with these investigations and is currently discussing certain resolutions.”
Of course, before the pandemic, the worries that Wall Street’s Wheeler dealers were chattering with each other on WhatsApp had involved companies other than JPMorgan Chase.Two senior commodity traders at Morgan Stanley Last year he lost his job for failing to stop using this type of communication. Other banks will almost certainly face similar problems.
But it’s hard to see that working from home will reduce the chance of sending banned text messages to colleagues. This practice also does not necessarily promote compliance with insider trading laws or company policies designed to prevent bullying or sexual harassment.
Bankers will tell you that they started working from home in roughly the same way that Donald Drumsfield said he entered Iraq-realizing that there are “known unknown factors” that could disrupt the mission. During the flight, and benefiting from the tolerance of regulators who hope that things will solve the problem, they redoubled their efforts to improve risk, audit and other control measures aimed at preventing laziness and theft by employees outside the office.
But what they are not sure about is whether they succeeded. Nowadays, hope is everywhere, because during the pandemic, Wall Street has escaped time and time again, and prices seem to only rise. But an industry executive admitted to me that a final ruling on working from home may take years. Banks are so complicated.
For older CEOs whose leaders are asking to return to the office, waiting for this process to end can be particularly difficult. I’m not saying they deserve sympathy-just understanding. Many of them grew up on a less bureaucratic and more personal Wall Street, where they interacted closely with their bosses and gradually became accustomed to this relationship.
The economist Henry Kaufman (Henry Kaufman), a former member of the Executive Committee of Salomon Brothers, is still a keen commentator on the Wall Street approach at the age of 93. He told me that in the early 1980s, at the dawn of the Reagan Revolution, he The company’s partners will sit at every large trading desk to ensure that no one does anything stupid. “A partner closely observed what was happening,” he added. “The partners are in danger-this is their capital.”
As companies such as Salomon got rid of partnership structures and were absorbed by larger banks (in this case Citigroup), this personal contact gradually disappeared, which had high-speed computerized transactions. Now, Kaufman says, “The owners of the business are shareholders, and they are somewhere outside-and unknown.”
The ultimate bet on Wall Street is that automation will save the situation, create an audit trail, and make fraud or malfeasance more difficult to cover up—regardless of whether the worker stays at home or not. Lurking in the background is the promise of blockchain technology and decentralized financial protocols, which have the potential to completely eliminate human intermediaries.
It is almost weird that so many bank owners still want to look directly at their employees. Again, maybe they know things that the rest of us don’t.