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Charlie Munger Quotes

Charlie Munger quotes are among the best zingers to Wall Street in existence. Known as Warren Buffett’s folksy business partner, Munger to has a way with words that makes him fun to listen to. Here are a few that stand out to us.

Charlie-Munger-quotes

“The major non-investment banks have by and large misbehaved in consumer lending. They have had a marketing model which is the equivalent of a liquor company that seeks out the people very susceptible to alcoholism, and tries to suck them into alcoholism.” source

charlie munger quotes

“To say that derivative accounting is a sewer is an insult to sewage.”  source

 

Charlie Munger quotes
“The derivatives traders have tended to rook their own customers. It’s not a pretty sight. It’s a dirty business.” source

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While it’s unfortunate that Munger and Buffett invest in some of the very products and banks they denigrate, we strongly endorse the sentiments in the quotes above.

For more on derivatives, see our derivatives timeline and our post “What Are Derivatives, and Why Are They Dangerous?”

 


Quotes About Wall Street From Lawrence Lessig, Elizabeth Warren, Buddy Roemer, Matt Taibbi, etc.

Do you have any to add?

lawrence lessig

Lawrence Lessig, founder of Rootstrikers: “For remember, we live in a world where the architects of the financial crisis regularly dine at the White House—and where even those brought to “justice” never even have to admit any wrongdoing, let alone be labeled “felons.”

buddy roemer quote

Buddy Roemer: “You want to know who owns America? A few at the top. And they’ve got one thing on their mind. No change. Look at Obama, all that hope and promise. No change. He went to Wall Street, had a fundraiser—$35,800 a ticket—and you know who the host was? Goldman friggin’ Sachs.”

neil barofsky quote

Neil Barofsky, former attorney general for TARP: “The same incentives that led to the 2008 crisis are still in place today and in many ways, the situation is worse. We have a financial system that concentrates risk in just a handful of large institutions, incentives them to take risks, guarantees that they will never be allowed to fail and ensures that the executives will never be held accountable for their actions.”

Camden Fine

Camden Fine, ICBA president: “Financial institutions with explicit government guarantees against failure haven’t exactly contributed to an economic boom. It’s been just the reverse—they triggered an economic collapse.”

scott shayShott Shay, Signature Bank Chairman: “We would trust our national defense to four military bases, but we trust our national economic security to four big banks.” (Watch the TED talk here)

aristotle-democracy-quote

Aristotle: “A government which is composed of the middle class more nearly approximates to democracy than to oligarchy, and is the safest of the imperfect forms of government.”

barry ritholtz quote

Barry Ritholtz, author of Bailout Nation: “The greatest triumph of the banking industry wasn’t ATMS or even depositing a check via the camera of your mobile phone. It was convincing Treasury and Justice Department officials that prosecuting bankers for their crimes would destabilize the global economy.”

 darker-John-Gastil-quote-wall-street-lobby-chart

John Gastil, professor at Penn State University: “There are two fundamental problems in American politics. The first is that most Americans do not believe that elected officials represent their interests. The second is that they are correct.”

elizabeth warren quote justic

 

Elizabeth Warren: “If you’re caught with an ounce of cocaine, the chances are good you’re going to jail … Evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.”

organized greed quote fur matt taibbi

 

Matt Taibbi, Rolling Stones Magazine: “Organized greed always defeats disorganized democracy.”

Revolution Quote JPEG

From Ron Paul’s The Revolution: “There are far more interest groups lobbying in Washington for special benefits and privileges than most Americans can imagine. I do not oppose just this one or that one. I oppose the whole apparatus, the whole immoral system by which we use government to exploit our fellow citizens on behalf of our interests.”

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Mike Lux, co-founder of Democracy Partners: “Wall Street is ground zero for the rest of the problems in our economy. And when they screw up in ways that hurt the rest of us, even when they blatantly violate the law, the fact that they are never seriously punished means they have no incentive to stop.”

Michael Lewis Quote
Michael Lewis, from his book Boomerang: “Extremely smart traders inside Wall Street investment banks devise deeply unfair, diabolically complicated bets, and then send their sales forces out to scour the world for some idiot who will take the other side of those bets.”

frank partnoy

Frank Partnoy, former Wall Streeter, on why Wall Street blew itself up: “You’re gonna make an extra $2 million a year—or $10 million a year—for putting your financial institution at risk. Someone else pays the bill, you don’t pay the bill. Would you make that bet? Most people on Wall Street said, Sure, I’d make that bet.”


Robert-Mazur

Robert Mazur, federal agent who worked as an undercover money launderer: “the only way to stop the flow of this dirty money is to get tough on the bankers who help mask and transfer it around the world.”

sheila bair bull by the horns too big to manage

Sheila Bair, former FDIC chair: “Even with very good management, these institutions are just too big to manage.”

gretchen-morgenson-quote-wall-street-bull-photo

Gretchen Morgenson, NYTimes finance editor: “Big banks are bigger than ever, and they exert enormous power over regulators and lawmakers. Increasingly smaller institutions can’t compete.”

upton-sinclair quote

Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Charles Ferguson Quote

Charles Ferguson, director of the film Inside Job, has a powerful quote in his book Predator Nation. The full quote is worth showing here. It’s one of the best.

America’s current problems developed over several decades, and they won’t be solved instantly.

In the meantime, Americans can do a number of things, both politically and personally. They can take to the streets; refuse to make political donations to the national party machines; support organizations such as Common Cause, Occupy Wall Street, and the Center for Responsive Politics; run for office themselves; and support candidates who do seem to care. At the personal level, we can save money; place our savings in local banks, credit unions and mutual funds; invest prudently and ethically; and, above all, educate our children.

Earlier I listed the three available avenues: an insurgency within one of the existing political parties; a third party; and a nonpartisan social movement. Any would face tough obstacles, and perhaps some combination of all three will be required. We might get lucky and one day find that America has elected a president who turns out to be deeply committed to fixing America’s problems and willing to take a lot of heat. Time will tell. But America is a remarkable and beautiful country in so many ways. I hope that somewhere in the United States is a courageous young leader in the making, someone who can persuade the American people to rise up and throw the rascals out.

TooBigHasFailed.org is a nonpartisan social movement, urging people to switch to a local lender.

 


Paul Volcker ATM Quote: “I wish someone would give me one shred of neutral evidence…”

paul volcker quote atm

Here’s a trenchant quote from Paul Volcker, former Fed chair. He even goes so far as to say that “The only thing useful banks have invented in 20 years is the ATM.”

Volcker is criticizing the rigamarole in the megabanks. The so-called “innovations” like:

Credit-Default Swaps

Credit default swaps can serve as a form of insurance, but they also allow traders to bet on whether a firm or a country (e.g. Greece) will default on its debt. In such cases, Trader A bets that the firm or country won’t default and Trader B bets that it will. Trader B makes regular, small payments to trader A, unless the default occurs, in which case trader A makes an enormous payout to trader B. It’s a gamble.

See our full writeup on credit-default swaps here.

Mortgage-Backed Securities

Everyone understands that the housing market tanked in 2007-08. What’s harder to grasp is how Wall Street was involved with it all. It’s complicated. But essentially it boils down to what Nate Silver pointed out in The Signal and the Noise: “For every dollar that someone was willing to put in a mortgage, Wall Street was making almost $50 worth of bets on the side.” The boring, technical name for these bets is “mortgage-backed securities.”

See our full writeup on mortgage-backed securities here.

Over-the-Counter Credit Derivatives

Derivatives are financial instruments whose value is derived from an underlying asset (stocks, bonds, commodities, etc.). Traders can swap interest rates, take bets on whether a firm will go bankrupt, safeguard against future asset price increases, etc—all under the ugly umbrella termderivative. The concept of a derivative has been around for centuries, but their use has recently exploded.

See our full writeup on derivatives here.

Rather than leading to net economic growth, each of these “innovations” have led to enormous economic losses.

- Source for the Volcker quote. Also here.


Quotes About Glass-Steagall

Quotes About Glass-Steagall - Luigi Zingales

The beauty of Glass-Steagall, after all, was its simplicity: banks should not gamble with government-insured money. Even a six-year-old can understand that, which is why former chairman Paul Volcker endorsed the principle in 2009. But then the Obama administration transformed the so-called Volcker Rule into 298 pages of mumbo jumbo. Why? Well, as an economist, I have been trained to infer intentions from outcomes, especially when I’m considering smart and experienced people. So it seems a reasonably safe bet that the Obama administration endorsed the Volcker Rule, rather than Glass-Steagall, because it knew that the Volcker rule was almost as popular but, unlike Glass-Steagall, required so many details to be implemented that it would never be enforced. In this way, the Obama administration could avoid displeasing the banking industry and get political consensus to boot.

Luigi Zingales A Capitalism for the People

Quotes About Glass-Steagall - Brooksley Born

Brooksley Born, a Wall Street regulator in the late 1990s who correctly warned that deregulating derivatives would cause a financial disaster, spoke out again about Wall Street in a panel in Washington. She said that “too big to fail is the primary problem” and that “the Glass-Steagall Act, before it began to be eroded by the bank regulators, was a good idea.”

Born also called for a break up of the big banks, saying that there are many good ideas about how to proceed with the effort, and that we should move forward on that front.

This is good news for our cause, since Born’s reputation as a clear thinker has deservedly been heightened in recent years. Ever since the financial crisis we’ve witnessed the aftermath of ignoring her warnings in the late 1990s (warnings which were scoffed at by bozos like Larry Summers and Robert Rubin). Born is someone who deserves to be listened to, and we ignore her at our own peril.

Quotes About Glass-Steagall - John Dingell

The repeal of Glass-Steagall certainly wasn’t the sole cause of the 2007-08 financial crisis, but it was a factor since it increased concentration in the biggest banks, leading to more powerful lobbying power, and since it created a sudden sharp rise in competition from commercial banks, pressuring smaller investment banks like Bear Stearns and Lehman Brothers to quickly increase their leverage to stay competitive.

What’s impressive about this speech from 1999 is how Congressman Dingell’s warnings proved to be true. We certainly have banks that are too big to fail, and we’ve had to bail them out. Unless we reverse course somehow we will likely experience bailouts again in the future.

Quotes About Glass-Steagall - Byron Dorgan

Also see Byron Dorgan’s warning from 1999:

“I think we will look back in 10 years’ time and say we should not have done this, but we did because we forgot the lessons of the past, and that that which is true in the 1930s is true in 2010″.

 

glass-steagall
This video contains more quotes on the topic:
http://www.youtube.com/watch?feature=player_embedded&v=51ug_BnLT9I


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