24 September 2008

Confessions of a Beach Banker

I used to work for a European-based private bank in Southern California. My clients were successful, educated professionals looking for investment management, second loans, and lines of credit.

A typical client of mine was a high-level executive or entrepreneur from the East Coast, Europe, or the Middle East. Many of them owned several properties. Their primary residence was in, say, Corona del Mar, but they often owned condos or duplexes in less affluent areas nearby rented to Hispanics, Asians, and other immigrants. In fact, not a few of them told me they wanted to snap up more properties to take advantage of all the immigrants coming in. They were aspiring to be slumlords.

Almost all of these high net worth clients had a belief that the housing boom in Southern California would never end. It simply did not figure into their anlaysis. And it showed. Their mortgages were mostly ARMs, with little to no documentation required. Sometimes a quick 'phone call would suffice. The falsification of income and assets was commonplace, but at the bank we were encouraged to turn a blind eye. Of course, many of the loans and lines we extended to these clients were secured by investment portfolios.

Consumption was out of control. Good taste was rarely if ever noted. My associates were decked out in the latest from Armani, Patek Philippe, and Gucci. Square-toed shoes and loafers were the norm, even amongst people who should have known better. In my Brooks Brothers suits, black half brogues, and repp ties, I stood out from the sartorial crowd.

I was regularly invited to parties in Los Angeles, Newport Beach, and Laguna Beach, at which could be found an unremitting supply of girls and drugs. I recall going to a party at a beach front house in Laguna Beach. Piles of cocaine dotted a glass table in front of a large window overlooking the beach. People were having sex in the jacuzzi outside. I am too young to have experienced the excesses of the 1980s, but I imagine it was similar.


Anonymous said...

“Vice is a monster of so frightful mien, As to be hated needs but to be seen; Yet seen too oft, familiar with her face, we first endure, then pity, then embrace”
Alexander Pope 1688-1744

Laguna Beach Trad said...

"How happy he, who free from care
The rage of courts, and noise of towns; Contented breaths his native air, In his own grounds...Blest! who can unconcern'dly find, Hours, days, and years slide swift away,
In health of body, peace of mind,
Quiet by day...Sound sleep by night; study and ease
Together mix'd; sweet recreation,
And innocence, which most does please, With meditation...Thus let me live, unheard, unknown; Thus unlamented let me dye; Steal from the world, and not a stone tell where I lye."

Anonymous said...

I thought a little and decided on my response, courtesy of George Gordon, Lord Byron:

To sit on rocks, to muse o'er flood and fell,
To slowly trace the forest's shady scene,
Where things that own not man's dominion dwell,
And mortal foot hath ne'er or rarely been;
To climb the trackless mountain all unseen,
With the wild flock that never needs a fold;
Alone o'er steeps and foaming falls to lean;
This is not solitude, 'tis but to hold
Converse with Nature's charms, and view her stores unrolled.

But midst the crowd, the hurry, the shock of men,
To hear, to see, to feel and to possess,
And roam alone, the world's tired denizen,
With none who bless us, none whom we can bless;
Minions of splendour shrinking from distress!
None that, with kindred consciousness endued,
If we were not, would seem to smile the less
Of all the flattered, followed, sought and sued;
This is to be alone; this, this is solitude!

Anonymous said...

ps - i have to say Pope's solitude is more appealing...

columnist said...

Was it ever thus? I used to be a private banker, but my grounding was in the traditional frame, of knowing your customer, and being sure of getting back he money you lend. Oh, and also understanding the products you were selling. I left banking, (and work) 11 years ago, when I was 40. I just couldn't understand it anymore, and was not convinced of the robustness of some products. I never regretted it, and now...well, I just feel sad that it had to grow to such an extraordinarily large bubble, before it burst, and the innocenti who are affected by it. I hope people learn from this mess, but I very much suspect the two main protagonists fear and greed will resume their place at the top table in the not too distant future.