Davos Delegates in ‘Denial’ as $25 Trillion of Wealth Vanishes

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Davos Delegates in ‘Denial’ as $25 Trillion of Wealth Vanishes


Regret is cheap for some delegates at the World Economic Forum in Davos, Switzerland.
Redemption for their role in the worst economic wreck since the Great Depression comes at a steeper cost.

By A. Craig Copetas and Christine Harper

Jan. 30 (Bloomberg) -- Regret is cheap for some delegates at the World Economic Forum in Davos, Switzerland. Redemption for their role in the worst economic wreck since the Great Depression comes at a steeper cost.

“Nobody in Davos wants to get near a negative like redemption,” said Robert Dilenschneider, chief executive officer of the Dilenschneider Group, a public relations firm in New York. “But the truth is that everyone here is part of the problem, and the public will soon begin demanding a pound of flesh.”

“No banker or businessman wants to take responsibility,” said Dilenschneider, who counts 40 Davos delegates as clients, their identities shielded by confidentiality agreements. “It’s their view that everybody else did something wrong.”

Questions about responsibility, blame and contrition hang in the cold mountain air at the glitzy Alpine resort this week like so much exhaled breath. With $1 trillion of bank losses and $25 trillion of market value gone missing since the start of the financial crisis, there’s much to account for.

“There’s a ‘Great Gatsby’ quality to Davos,” said Niall Ferguson, a professor of history at Harvard University in Cambridge, Massachusetts, referring to the novel by F. Scott Fitzgerald. “When people look back at this gilded age, I’m sure there will be images of the investment bank parties at Davos, just as people looked back at flappers after the 1920s. People are still in denial.”

Ferguson, author of “The Ascent of Money: A Financial History of the World,” and a first-time Davos delegate, said “There’s a sense of ‘let’s have the party anyway,’ and ‘let’s talk about the post-crisis world,’ as though that could be soon.”

‘Stupid Things’

At a panel on leadership yesterday morning before hosting a reception with champagne and canap s at the Hotel Europe Piano Bar, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon expressed frustration at those who seek to pin all the blame on bankers.

“I take full blame for all the American banks and all the things they did,” said Dimon, 52, the only CEO of a major U.S. financial institution to attend the conference this year, adding that he knows that’s what people want to hear.

Regulators, he said, should share some of the blame.

“God knows, some really stupid things were done by American banks,” Dimon said. “To policy makers, I say where were they? They approved all these banks.”

Stephen Green, chairman of London-based HSBC Holdings Plc, also criticized regulators at a panel about capitalism on Wednesday. Green, 60, a Church of England lay minister who has written a book about reconciling a life in banking with his belief in God, called for “an overhaul of the regulatory environment.” He also talked about the need for self-regulation, saying that “no amount of rules is going to enforce good behavior.”

‘Everybody Participated’

At a press conference on Jan. 28, he dodged the question of personal responsibility, saying only that “the banking industry” has “something to apologize for.”

One Davos regular, Washington-based Carlyle Group’s managing director David Rubenstein, said he thinks a key issue at this year’s gathering is “who is at fault.” Yet Rubenstein, who was saying at Davos two years ago that the outlook for leveraged buyouts was “very robust,” says responsibility shouldn’t be tied only to him or his industry.

“There are six billion people on the face of the earth, and probably about five billion participated in what went on,” Rubenstein said in an interview. “Everybody participated in some way or shape or form.”

No Innocents

Ruben Vardanian, CEO of Russian investment bank Troika Dialog Group, said just saying sorry is not enough.

“Our values became miserable,” Vardanian said. “We are all guilty, and the scope of attrition is large.”

Suzanne Nora Johnson, a former vice chairman at Goldman Sachs Group Inc. and a director of American International Group Inc., took a similar view: She said there are no innocents walking Davos’s icy streets.

“There’s no immunity in any sector,” says Johnson, who heads the World Economic Forum’s Global Agenda Council on Finance and Business. “No one did a good job.”

Spreading the blame around is one thing; whether bankers are ready to atone for their actions is another.

Abu Eesa Niamatullah, executive director of the Cheadle Mosque in Manchester, England, who is in Davos to tend the spiritual needs of global business leaders, says Islam calls its cleansing process “expiation” and that he doesn’t expect any takers.

Redemption

“Bankers don’t want redemption for the moral wrongs they’ve committed against humanity,” said Niamatullah. “Redemption is a heavy word for Davos Man because remorse must come with sincerity and the desire to atone for the transgression. There are no sincere acts of sorrow in Davos.”

That may be because Davos has no time for redemption, says Barry Gosin, CEO of Miami-based global real estate firm Newmark Knight Frank.

“If a shark bites your leg off while swimming in the ocean, can you condemn the shark? This was not an intentioned plan to destroy the world. Wall Street was designed to make money.”

If atonement is difficult, retribution may prove “brutally difficult,” Starwood Capital Group CEO Barry Sternlicht said in an interview in Davos. As Sternlicht sees it, “everyone wants a head, and that’s not reasonable. To do that, you’d need to take out the top 20 executives at the 300 biggest financial firms.”

Humility, Transparency

The forum’s chief redemption officer, John DeGioia, hasn’t figured out how to make the moral component a useful part of any economic stimulus package.

“This moment requires a real humility about the fact that we built these systems and are responsible for them,” says DeGioia, president of Georgetown University in Washington and head of the forum’s Global Agenda Council on Society and Values. “None of us has demonstrated the leadership required and humility necessary to respond to the depths of this crisis.”

John Studzinski, a 52-year-old senior managing director of Blackstone Group Inc., the New York-based private equity firm, says Davos delegates need more than humility.

“People can’t be transparent until they start being transparent with themselves,” Studzinski said.

To contact the writer on the story: A. Craig Copetas in Paris at ccopetas@bloomberg.net.
Last Updated: January 29, 2009 18:17 EST

 

"No one did a good job" - total bollocks.

 

Seems like "everyone" is afraid/unaware of "basic math".....

Very sadly....and very "idiotic"....