A brief, ignoble history of the BlackBerry on Wall Street
The Blackberry, then and now. The addictive little device has connected the financial industry, but also plagued it with high costs and compulsive behavior.
While Occupy Wall Street tries to beat down the doors of the financial industry - with protests and squid effigies -Wall Street may actually be thoroughly destroying itself from within, thanks to the addictive powers of the BlackBerry. For over four years, the Venn diagram of "BlackBerry addiction" and "Wall Street failure" has overlapped to include former Lehman Brothers CEO Dick Fuld and now former MF Global CEO Jon Corzine. The New York Times reported this week, for instance, that Corzine's risk-taking meant that he "compulsively traded for the firm on his BlackBerry during meetings, sometimes dashing out to check on the markets."
The BlackBerry again! That little device is like the Zelig of Wall Street, blending into the background and yet always becoming the center of attention, slowly sidling its way into history, an enabler of the all the worst and least thoughtful impulses that run through the heads of investment bankers and traders. It's time, however, that the BlackBerry's many misadventures in finance were put on its permanent record, and Easy Street is here to help.
Herewith, a brief timeline of the BlackBerry's seductive and destructive effect on Wall Streeters.*
2000: "As early as 2000, the word 'CrackBerry' was being used to describe the addictive nature of these devices," Canadian researcher Catherine Middleton (not the princess) points out in a research article published in 2008. She adds, "there is no doubt that BlackBerries are deeply embedded in the daily lives of many of their users, and can trigger conflicts about work boundaries."
February 2007: Wall Street CEOs, including Dick Fuld at Lehman Brothers and Richard Handler at Jefferies, confess to the Wall Street Journal to being addicted not just to their BlackBerrys, but also to a particular game installed on them: BrickBreaker. Fuld even had the game uninstalled, but then could not live without it. Note that this article runs well before the subprime crisis hit Wall Street in June 2007.
March 2007: Dealmakers of all kinds seem curiously unable to put down their BlackBerries, even in cities as exciting as New Orleans.
March 2007: David Jacobs, a vice-chairman of Deutsche Bank, describes his new separation from his company-issued BlackBerry as "liberating and terrifying." He elaborates, "“It’s liberating in that you actually get to talk to your kids. But it’s tough going from 125 emails a day to none. It’s cold turkey.” [Postscript: Jacobs is now chairman of renewable-energy company rTerra, which presumably would have him back on the BlackBerry sauce.]
June 2007: A travel site that creates quirky vacation itineraries offers "Blackberry-free zone packages."
October 2007: As the subprime crisis spreads and bank profits get hit, Bank of America clamps down on issuance of BlackBerries to employees.
September 2008: Neel Kashkari, the man in charge of TARP, uses his BlackBerry to calculate the infamous sum of the bailout: $700 billion. The Washington Post wrote over a year later, “In Washington, [Kashkari] used his BlackBerry to determine the bailout sum presented to Congress. His arithmetic: “We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five percent of that is $700 billion. A nice round number.”
September 2008: As the CEOs of America's major banks waited for Treasury Secretary Hank Paulson to tell them about TARP, they were "milling around and tapping on their BlackBerries," according to Andrew Ross Sorkin's Too Big to Fail.
October 2008: The MC at the Most Powerful Women in Banking gala instructs attendees to put away their omnipresent BlackBerries, deadpanning, "you haven't been able to solve the crisis in the past 10 months, so you won't be able to solve it in the next few hours."
October 2008: Andrew Lahde, the founder of Lahde Capital, closes his fund. In his goodbye letter to investors, he encourages his fellow financiers to re-center themselves. "I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the BlackBerry away and enjoy life."
December 2008: Congressional hearings on the financial crisis and the problems of automakers are marred for viewers by aides constantly checking their BlackBerries instead of keeping an eye on the action.
April 2009: Wells Fargo bans employees from checking their BlackBerries during meetings, and even fines them $100 if they violate the rule.
June 2009: As BlackBerry addiction becomes a bigger issue in all industries, Hollywood talent agencies including CAA ban BlackBerry use during meetings.
September 2010: JP Morgan starts testing the iPhone as an alternative to standard-issue BlackBerries for its staff.
November 2010: Greg Farrell, author of Crash of the Titans, reveals that former Goldman Sachs executive Peter Kraus lost out on a job at Bank of America Merrill Lynch partly because then-CEO Ken Lewis disliked how Kraus ostentatiously took the floor at meetings and "continually flashed around his bright green BlackBerry."
November 2010: Bank regulators in the U.K. adopted a rule to tape BlackBerry conversations and those on other mobile phones as a way to catch fraud and insider-trading.
December 2010: The U.S. Treasury's new blog and Flickr feed include a picture of Secretary Geithner's trip to Asia, captioned: "The perfect meal: Udon and a BlackBerry." Sharp-eyed tweeters notice the BlackBerry's screen holds an email about the debt ceiling.
December 2010: David Einhorn, one of Wall Street's more regularly successful investors and the one who correctly suspected that Lehman was playing fast and loose with accounting, tells DealBreaker's Bess Levin that he has never owned a BlackBerry.
February 2011: Alleged insider traders including Samir Barai are done in by their BlackBerry messenger chats, unaware that they cannot be fully deleted.
June 2011: A lawyer suggests to the Wall Street Journal that BlackBerry usage and being constantly connected to the office is ample excuse for taking a private jet.
June 2011: Morgan Stanley's "outlook has changed so much from the heady days of the past that the firm is planning to keep a close watch on BlackBerry usage....One Morgan Stanley employee joked Tuesday that he planned to return a phone call from a land line because he didn't want to use a BlackBerry."
June 2011: An executive at General Growth Properties has it written into his contract that he gets to keep his company-issued BlackBerry if he leaves.
August 2011: Many Wall Street firms tell their employees to stay home after Hurricane Irene, reasoning that they have BlackBerries to keep in touch with the office.
October 2011: In the Wall Street movie Margin Call, a key plot point involves a BlackBerry: when the firm lays off a top executive, played by Stanley Tucci, it also turns off his company-issued BlackBerry. Much of the ensuing action centers on how the firm then can't find the executive, who may hold key information about its exposure to bad debt.
Of course, you can't really blame the diabolically addictive little smartphone for Wall Street's trouble. Wall Streeters just manifest with their BlackBerries the compulsive behavior that the Street encourages elsewhere - the excesses of ambition and speed and late nights and status-seeking under the guise of competition and success. Traders - like Fuld and Corzine - are used to responding to every breath of the market, which makes them particularly susceptible to the impulse of constant feedback and stimulation; an uncharitable comparison would be to the legions of Vegas gamblers who love to play the slots.
Caitlin Zaloom captures the dichotomy well - of the cool banker or trader who becomes a hothead when given a chance to trade. Zaloom is an ethnographer who has turned her talents to Wall Street in her book, "Out of the Pits: Traders and Technology from Chicago to London." In her chapter on Economic Men, she writes,
Crowds like those on the trading-room floor have often been thought to undo reason and unleash passions, and traders' conduct certainly support that claim. Yet dealings with money have been thought to have the opposite effect. The pursuit of wealth, many original philosophers of capitalism thought, would dampen socially destructive passions. These thinkers trusted that the pursuit of wealth would counteract the more violent impulses of competition and channel them toward self-control...[yet] in contrast with the dispassionate affect that money ideally encourages, humor and hot-blooded behavior mark the trading floor and dealing room. Traders engage ardently with money; they do not perform their economic calculations with detached reason.
In other words, the BlackBerry is often just an outlet for the excitement junkies and perpetual crisis mindset that Wall Street breeds. And is it a coincidence that Goldman Sachs - the firm that so many people have tried to take down that it's the Rasputin of Wall Street - has survived so long and in such hale health? Not if you consider that its CEO, Lloyd Blankfein, formerly known as one of the Street's biggest BlackBerry addict, has openly abandoned his BlackBerry.
*I have to give a big hat tip to the talents of Bess Levin, the doyenne of DealBreaker, for her immaculate attention over the years to chronicling BlackBerry abuse. Her archives were a rich source for this timeline.