Our sorry need for others to apologiseBy Michael Skapinker Published: October 20 2008 18:27 | Last updated: October 20 2008 18:27
Should bankers say sorry? In a letter to the Financial Times last Friday, Andrew Wilson of Claymires, Scotland, who is not a banker, said he could not see the point. The market collapse was not the fault of bankers alone. Far better to tackle the crisis than look for apologies.
That did not appear to be the view of the US Congress oversight committee when its members interrogated Richard Fuld, chief executive of Lehman Brothers, this month. They demanded contrition.
During his two hours and 10 minutes’ cross-examination, Mr Fuld came close to obliging. “I take full responsibility for the decisions that I made and for the actions that I took based on the information that we had at the time,” he started out.
At one point he said: “I, like a number of people, thought the mortgage crisis was contained to residential mortgages. There were a number of people, many experts included, that also thought that – and I was wrong.”
You will have spotted Mr Fuld’s get-outs. His mistakes were based on the information he had at the time and, if he was wrong, so were many others, including the experts.
So who was to blame? Short sellers and rumour mongers, according to Mr Fuld. The committee members were not impressed. The reason he earned $480m over eight years (Mr Fuld quibbled with this figure but agreed he earned a lot) was that he was meant to be smarter than other people.
At the end of the hearing, Henry Waxman, the committee’s chairman, said to Mr Fuld: “You took responsibility for the decisions you made. In retrospect, you think you should have done something different. But you don’t seem to acknowledge that you did anything wrong.”
This met with a glare from Mr Fuld that must have terrified many Lehman employees over the years.
Others have come closer to saying sorry. Alan Yarrow, chairman of the London Investment Banking Association, expressed regret and said: “Clearly, mistakes were made.”
Closer, but note how the passive voice distances the mistakes from the mistake-makers.
Last year Carol Tavris and Elliot Aronson, two psychologists, published an illuminating book called Mistakes Were Made. Actually, the full title was Mistakes Were Made (But Not By Me). It helps explain why not just Mr Fuld, but all of us, find it hard to say sorry.
The book is not about banking. It is about how, in every area of life, we try to justify our behaviour when it contradicts the way we see ourselves.
We think we are honest and decent. So how do we explain those lightly fictionalised expenses on our tax return? By telling ourselves that we pay too much tax as it is and that the government wastes so much of our money anyway.
Holding two contradictory ideas, such as that we are honest and that we are justified to cheat on taxes, is called cognitive dissonance. Much of human life is an attempt to explain away the discomfort it causes. “A dog may appear contrite for having been caught peeing on the carpet, but she will not try to think up justifications for?her misbehaviour,” the writers say.
The more energy we invest in an activity and the bigger the consequences, the less willing we are to accept we have done something wrong. This, the book says, is why the childcare experts who helped imprison nursery teachers on false (and often wildly implausible) charges of child abuse refused to accept they had been mistaken.
It is why prosecutors find it so hard to admit that people they have helped imprison are innocent, even when subsequent DNA evidence shows someone else was guilty. When the science suggests they are wrong, they dismiss the science. That they might have put an innocent person behind bars is so damaging to their idea of their professional competence that they recoil from it.
Now imagine you are Mr Fuld, who began as a Lehman intern 42 years ago, having to accept that you have presided over the destruction of a 158-year-old institution, one of the most venerable names in finance.
He can take “full responsibility” – that is congruent with the idea of a tough chief executive for whom the buck stops here. Saying sorry is something else.
Does it matter whether bankers say sorry? Or is Mr Wilson, our letter writer, correct that we should not be looking for their apologies? It is certainly true that others were responsible for the fiasco too – such as house-buyers who took on debts they could not service. Some, it is true, were hoodwinked. Many others trusted that rising house prices would rescue them from their imprudent borrowing.
Then there are those of us – governments, regulators, ratings agencies and journalists – who never blew the whistle.
It is worth asking why bankers find it hard to apologise. It is also worth wondering why the rest of us need their apologies so badly.