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Psychological testing of Wall Streeters
would pay dividends to the rest of us

moneybag manShow us someone who hasn’t made acid comments about the movers, shakers and charlatans of Wall Street and the broader financial industry, and we’ll show you someone who hasn’t been paying attention.

For all of that, we’ve yet to see a member of the financial commentariat go off on banksters and brokers as bluntly as Dow Jones columnist Al Lewis just did.*

The easiest way to explain the never-ending string of Wall Street scandals and implosions is to observe that a surprising percentage of people in the financial industry are psychos.

The latest edition of CFA Magazine, a trade publication for chartered financial analysts, features an article claiming one out of 10 people working on Wall Street are psychopaths.

Sherree DeCovny, the former investment brokler who wrote the piece, says the estimate came from researchers, including a psychologist who treats Wall Street professionals.

Lewis goes on to tag a good many Wall Streeters as sociopaths, explaining that term and psycho denote such antisocial traits as lack of empathy, disregard for consequences and runaway risk taking. DeCovny says when most of us were learning the right-from-wrong lessons of childhood, many who grew up to be Wall Streeters “didn’t get it.”

This insight wouldn’t be so alarming if Lewis and DeCovny were describing carpet installers or bicycle shop owners. But when you realize the financial industry represents about 8.4 percent of the United States’ $15 trillion GDP, and that at about this time a year ago financial firms accounted for 29 percent of corporate profits, it’s red lights and sirens all over the place.

Of course, not everyone in the financial industry is a predator like Mitt Romney or a scam artist like Bernie Madoff. It’s just that there’s this strong, sizable presence. Making matters worse, you can’t ID Wall Street’s bad guys until they’ve gone from being charming, charismatic, go-getter types in expensive suits to lives-wrecking fiends in prisonwear.

Lewis’ charges ring true and make sense. But, what if anything can be done to weed out the most greed-driven, devious and dangerous banksters, brokers and so on before they wreak more havoc on the rest of us?

Lewis relays DeCovny’s suggestion that financial firms do psychological screeing of job applicants. That makes sense, but it’s not enough.

Even good, level-headed people can be corrupted by being submerged for years in a culture of avarice. We say screen the whole lot of them — from the mail room to the CEO’s office suite — at least biannually.

And, make regular psychological testing one of several conditions for these people to obtain and renew government-issued licenses to ply their trade. They will call screening and licensing outrageous government interference in the private sector.

We call it a survival plan for the rest of us.

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* The Wall Street Journal doesn’t make its content freely available on the Web the way most newspapers do, so we can’t offer a direct link to Lewis’ column. You can access it and read the whole thing in pdf form by googling for “Al Lewis + Wall Street + psycho.”

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14 Comments

  1. I’ve seen a number of articles on this. One research project tested known psychopaths and CEOs. CEOs by and large out-psychopathed the Psychos. One conclusion was if one came from a well to do family one became a CEO and if one came from a poor family one went to jail. It was ever thus and it isn’t just Wall Street

  2. John Myste says:

    I am curious if this is that different from the regular population. People are nuts.

  3. Demeur says:

    I was thinking of this exact same concept while reading articles in the financial pages. These guys have only one thing in mind, to make money ethics be damned.

  4. S.W. Anderson says:

    Blog Fodder, that brings to mind the infamous “Chainsaw” Al Dunlap, who wrecked Sunbeam, among other businesses.

    Myste, feeling a bit misanthropic today? Think about that successful black businessman in New York whose favorite pastime is sending young people who pledge to finish high school with good grades, and do that, to college for four years. There are plenty of good, well-balanced people everywhere.

    Demeur, there’s a definite singleness of purpose to the breed.

  5. Tom Harper says:

    Only one out of ten Wall Streeters are psycho/sociopaths? I would have sworn the percentage was much higher 🙂

    I think we’ve all known this intuitively, as Demeur says, just from the news.

    I know Hollywood isn’t reality, but several recent movies have presented this “Wall Street VIP = Sociopath” very realistically: The Company Men, Margin Call and Money Never Sleeps (the sequel to Wall Street). Also, on several cop shows — namely CSI: New York and Law and Order: SVU — the perp often turns out to be a Wall Street VIP who’s even more of a monster out of the boardroom than in.

    In any case, it’s good to have an article like this, to give some Gravitas to what we already suspected.

  6. Dave Dubya says:

    Like being a Republican leader in these times, I think being a sociopath is almost a pre-condition for being a Wall Street bankster. The don’t get there by being compassionate human beings. They lie and cheat and use others as pawns in their game of greed and power. Anything they can get away with is fair in their world.

    I would say maybe 10 percent at most are not sociopathic.

  7. John Myste says:

    Mr. Anderson,

    I only meant that the knowing the number of sociopathic people in Wall Street and the number of psychos in Wall Street is not that valuable without knowing how this compares to the general population at large. I almost think only ten percent would be a laudable number, if anything. Have you been to Walmart lately?

  8. Jolly Roger says:

    I have said for years that MBA graduates are trained sociopaths. I believe it.

  9. S.W. Anderson says:

    Tom, I didn’t realize there had been so many movies of this kind out in recent years. Maybe it’s good, to raise public awareness and maybe some awareness in the financial industry itself.

    Dave, that’s too close to saying they’re all alike. Maybe more than 10 percent, but I would have to see solid proof to accept anything like 90 percent.

    Myste, I’ve been to Wal Mart recently. I didn’t run across a single sociopath the whole time. Not even in the parking lot. Re: comparing to the ratio in the larger public. Technically, I suppose you’re right. As a practical matter, I suggest you’d do better to quit evaluating brush strokes, step back and see the painting.

    J.R., I’m reminded George W. Bush has an MBA. How trained he is is an open question.

  10. John Myste says:

    Obviously, sociopaths do not step up and announce themselves. You would have to administer the test. I suspect there were plenty at Walmart.

    Per your recommendation, I did step back and evaluate the painting. It looked like a series of brush strokes to me.

  11. Everyone’s nuts, just that the Wall Street nuts are usually there because of fiscal or social advantages that the other nuts don’t have.

  12. S.W. Anderson says:

    John Myste wrote: “Obviously, sociopaths do not step up and announce themselves. You would have to administer the test.”

    Meaning? Wait, on second thought I don’t want to know.

    Randal, that’s a good observation.

  13. Snave says:

    I for one would like to know that whether I make or lose money in my investments is not dictated by panic.

  14. Octopus says:

    According to the DSM-IV, the incidence rate of sociopaths (i.e. Antisocial Personality Disorder) in the general population is roughly one percent. If the 10% figure for Wall Streeters is accurate, it would represent a 10-fold increase over the general population … just slightly behind the percentage of sociopaths that make up the prison population. Anyone want to hazard a guess at the percentage of sociopaths who are politicians? Right-wing radio pundits? Evangelical ministers?