Investment Banker Turned Rabbi Reflects on Occupy Wall Street

In the last 3 weeks, I have been to downtown to see the Occupy Wall Street protest twice to see what it was all about. I have seen countless friends and colleagues write and post about it and how it moved them. I watched an inspirational video of the large Kol Nidre service across the street from the protest.

However, while I can certainly appreciate people's frustration and the actions taken to make a better world, having worked on Wall Street as an investment banker for 2 years something felt very wrong. The tone of the signs, the messages of many videos online I felt vilified me and many of my former colleagues. The protests don't single out specific practices on Wall Street, but that the entire industry is an oligarchical tyranny ruining America. I thought back to my years on the Street and tried to think about what I did day in and day out for 2 years, was it really evil? Was it greed? Was it destructive to society at large?

Even though it is been 10 years since I left Wall Street and entered a profession that forces me to think often about moral issues, I concluded the answer to those questions was a resounding No.

And so, I want to write about what I did on Wall Street as an open letter for those supporting OWS to elicit a response as to what was wrong with what I did and if nothing why vilify lots of good people?

So, here is what I did on Wall Street and I'll let others comment if it was wrong, immoral or greedy?

I advised those in the mortgage servicing industry on hedge positions, mergers and acquisitions and valuations.

To explain in more detail what that means, I want to briefly explain a bit of history of the mortgage servicing industry and what the tasks I was performing accomplished and how it benefited the greater society.

When a bank makes a mortgage loan, they sell the loan in the secondary mortgage market to investors like Fannie Mae, Freddie Mac, etc. They also sell the right to service the loan to a servicing company. The servicing company does all the work for the loan going forward. They send the bills, collect the mortgage payment, they pay the taxes and insurance on the property, pass the payment onto the investor. They are responsible for foreclosures, collecting late fees, etc. In exchange, they get paid a service fee (usually between .25% and .75%) and keep any ancillary fees.

Servicing used to be done by small mom and pop shops operating in small suburban offices employing clerical middle class office employees.

That was until the mid-90s when the Financial Accounting Standards Board changed the accounting regulations for mortgage servicing in 1995 and 1996 with FAS 122 and FAS 125. What those regulations said was the mortgage servicers needed to account for the market value of their servicing rights. Here is what that basically means -- they need to list as their assets the value of the right to service their loans and if that value goes up or down they need to change the value on their books and recognize the gain or loss as income or a loss. But here's what happens, when interest rates go down, there is an incentive for people to refinance and pay off their old loan. If the loan is paid off, there is no more servicing right. What the new accounting law meant was that every time interest rates went down, services would have to show that they lost money even if people never actually paid off their loan.

Most mom and pop shops couldn't deal with it. They kept reporting losses as interest rates fell and were going out of business. Here entered the big commercial banks who had the sophistication to deal with this risk. They would buy offsetting financial instruments whose value go up when interest rates fell. Hence they hedged the risk of the value of their servicing rights declining.

My firm was hired by these commercial banks to advise them on which financial products to buy to hedge those risks. My job -- to crunch the numbers on the servicing rights and the hedges.

Furthermore, the accounting rules later mandated that companies prove the value of their hedges correlated to the actual value of servicing rights. My firm would help companies demonstrate this.

If we hadn't done this, servicers would go out of business. If there is no mortgage servicing, there would be no mortgages -- and people couldn't buy homes.

Still, mortgage servicing was still a losing business given all new accounting rules, and only a few companies felt they could go into it by building large economies of scale and hence there was a lot of mergers between servicing companies.

Again, we were hired to advise a fair price to either buy or sell a mortgage servicing company so that the buyer or seller would be paying or getting the appropriate price.

For me, this was an honest job. I went to work on time, tried to give the best advice to the firm's clients that was accurate, convincing and honest. For my work, I received a flat salary which while I am not allowed to disclose, I will say was a very middle class salary and not something that would even come close to what OWS calls the 1%. If the firm did well, we the employees who worked hard by providing good advice to our clients got to share in the firm's success with an annual bonus.

So, I ask those supporting OWS, what was wrong with my job?

I realize I only described one niche of what happens on Wall Street but I could talk about the value provided by many other good hard working people on the Street as well.

I can also now write how the services we provided lived up the highest of American values, and as a Rabbi Jewish values as well.

* Note -- some of the accounting rules mentioned in this post have been changed in the 10 years since I left investment banking.

Celebrating the Death of an Enemy

The killing of Osama Bin Laden this past Sunday has ignited an interesting debate among religious leaders of all faiths as to the appropriateness of celebrating the death of another human being, albeit one that was seen as evil as Bin Laden.

At the onset, I will admit that upon first hearing the news I was not only joyous but I was deeply moved and inspired by the celebratory crowds that gathered Sunday night outside the White House, in Times Square, and at Ground Zero. While I am certainly aware of many Jewish teachings that specifically admonish celebrating the downfall of our enemies, both personal and national, we do have a plethora of other sources about rejoicing when the wicked perish.

Understanding that different ideologies, experiences and tendencies might lead different people to focus on those different sides of our tradition, some of the criticism of the immediate celebrations shocked and disturbed me. Several religious leaders spoke of “cringing” at the site of celebrations and warned that we should not become like the terrorists. Really? Does anyone really believe that college students at Georgetown University singing the Star-Spangled Banner and chanting “USA! USA!” outside the White House have suddenly embarked on a dangerous road where they will then start killing indiscriminately? The suggestion is preposterous. Another religious leader commented about his distaste for the “circus like” atmosphere of these celebrations as if their favorite football team had just won the Superbowl. While both are so to speak victory celebrations, were the emotions really the same and were they really that inappropriate.

Let’s be clear, I understand where the criticism was coming from – a deep desire to preserve our mutual religious traditions’ infinite value placed on human life, and the strong importance of not dehumanizing our enemies.

With this in mind, I felt it necessary to explore as much of a Jewish approach to what is and what is not an appropriate reaction to the death of someone like Bin Laden.

As has been quoted throughout the past week, the tension can best be summed up by two apparently contradictory verses in the book of Proverbs. Proverbs 24:17 reads, “If your enemy falls, do not exult; If he trips, let your heart not rejoice.” On the other hand, we read in Proverbs 11:10 “When the wicked perish, there are shouts of joy.”

In addition to the verses, we have traditions for both reactions:

After the Egyptians drowned in the Sea of Reeds (others Red Sea), the Children of Israel sang the famous Shirat Hayam (Song of the Sea). The lyrics explicitly rejoice in the death of the Egyptians, “Pharaoh’s chariots and his army he has cast into the Sea; And the pick of officers are drowned in the Sea of Reeds” (Exodus 15:4). The song continues, “They sank like lead in the majestic waters.”

Yet at the same time, we are told in the Talmud (Megilla 10b, Sanhedrin 39b) that the angels were not allowed to sing at the sea since God said, “My creatures are drowning in the sea and you want to sing.” (That statement is often given as a reason we only say half Hallel the last 6 days of Pesach despite a different reason given in Talmud Arakhin)

The prophetess Devorah sings about the death of Sisera at the hands of Yael after first describing in the song his graphic death, “At her feet he sank, lay outstretched, At her feet he sank, lay still; Where he sank, there he lay – destroyed!” (Judges 5:27) The song concludes, “So may all your enemies perish O Lord, But may His friends be as the sun rising in might” (5:31).

David sings, “I pursued my enemies and wiped them out, I did not turn my back until I destroyed them.” (2 Samuel 22:38; read as Haftara on 7^th day Pesach).

And let’s look at the ultimate of “circus” celebrations – Purim – here we make noise at the very mention of the evil Haman to blot him out; we sing how cursed he was in the song “Shoshanat Yaakov” at the conclusion of Megillah, we pass out candies and other foods to our, naming sweet cookies after the enemy, and we eat, we drink, and we are merrier than any other Jewish holiday – not just for the fact that the Jews of Persia were saved, but at the very fall of Haman the wicked (see Al Hanisim for Purim). Even modern songs for Purim like to bash Haman “O once there was a wicked, wicken man and Haman was his name sir . . . If guns had been invented yet, this Haman, I would shoot sir.” – Can’t get more celebratory and gleeful than that.

And yet at the Passover Seder, we are all familiar with spilling drops of wine to show our joy is diminished because of the Egyptians who suffered during the 10 plagues.

Are these just two different sides of our tradition or is there a means of reconciling them that they really speak to one truth and there is no contradiction?

I believe our sages make several attempts at reconciliation. Some I believe are more satisfactory than others, and I will look to examine some of them.

1. Divine Vs. Human – The Talmud in Megillah 10b and Sanhedrin 39b quotes an opinion of Rabbi Elazar (Rabbi Yossi Bar Chanina in Sanhedrin) that says God does not rejoice but others do rejoice. This statement understands the perspective that it is basically human to rejoice at the downfall of our enemies, but at the same time that we take joy, we understand that the Divine perspective is different and God does not rejoice. We should not be faulted for our celebrations, as the Children of Israel were not faulted for singing at the Sea, but we do need to take stock afterward and see God sees this from another perspective.

2. Death of Evil vs. Death of the Man – The Talmud in Sanhedrin 113b states that our Rabbis taught that when a wicked person comes into the world, anger and hatred come into the world, as it says, “Comes the wicked man, comes derision, And with the rogue, contempt.” (Proverbs 18:3). When a wicked man leaves the world, goodness comes, as it says “When the wicked perish, there are shouts of joy.” (Proverbs 11:10). When a righteous person leaves the world, evil comes, as it says, “The righteous man perishes, And no one considers; Pious men are taken away, And no one gives thought that because of evil, the righteous was taken away” (Isaiah 57:1). When a righteous person comes to the world, goodness comes to the world, as it says, “This one will provide us relief from our work and from the toil of our hands” (Genesis 5:29)

This passage reminds us that there is a more to a person, righteous and wicked, than just the person and with their coming and leaving the world, certain traits and attributes come and leave with them. With the fall of the wicked, it quotes our verse in Proverbs. One can understand perhaps from here the joy that is felt when a wicked person leaves, is the joy over the wickedness that leaves with him and the goodness that will enter the world and fill that space.

3. Jew Vs. Non-Jew – The Talmud in Megillah 16a questions celebrations over the death of Haman based on our verse “If your enemy falls, do not exult” – The Talmud answers that verse is with respect to Israel (i.e. your adversary among the Jewish people), but with respect to him it says “And you shall tread on their backs” (Deuteronomy 33:29). This one is obviously disturbing to modern ears especially to people with a more worldly outlook, but the text is there and it is one of ways our Sages sought to read the verse and so I felt the need to include it.

4. Particular Vs. Universal – Rabbi Adin Steinsaltz wrote this week that the verse describing not to exult over the fall of your enemies refers to a personal or even national enemy – namely someone who is just fighting against you. The verse that states when the wicked perish, there is joy refers to someone who has become so evil so as to become an enemy of all of humanity. The entire essay can be read here: http://www.theglobalday.com/binladen/

5. The Need to Destroy the Wicked – The Talmud Yerushalmi in Sanhedrin 4:9 raises the possibility that people might ask, “Who are we to put to the wicked to death.” The response is our verse from Proverbs, “With the fall of the wicked there is joy.” The Jerusalem Talmud here understands the basic human hesitation against taking a life but reminds of the good that can follow and hence our obligation to do so when necessary. (This is similar to #2 above)

6. Immediate Vs. Later Reaction – While I have not found a specific source for it, I think one might consider the immediate joy when one is in the moment, as opposed to the manner in which we celebrate in the future when the event is marked with holidays and less spontaneous celebration. This would work for the Song of the Sea and our present half Hallel (again ignoring Talmud Arakhin’s reasoning) and our spilling wine at the Seder. Purim is more difficult.

Lastly, I’d like to perhaps suggest, we might even learn an additional approach from what the crowds last Sunday chose to sing and chant.

The Star Spangled Banner, sung Sunday probably just because it is our national anthem, has a history that might shed light on our dilemma. It was written by Francis Scot Key in the midst of the War of 1812. As he witnessed the destruction of war and the fearful night in Baltimore Harbor and loud explosions in the distance, Key looked up and which “bomb bursting in air” and gained hope seeing the flag still atop Fort McHenry. Perhaps what the crowds were celebrating that after seeing so much destruction, after living in so much fear and anxiety, and after engaging in a fight against someone so determined to kill us, that we are still here. We are still alive living in the land of the free.

And let’s look to chants of “USA!, USA!” – on the surface, it comes just from the cheers for the 1980 US Olympic Hockey Team at Lake Placid. But that hockey victory was no ordinary victory. It came at a time when feelings in the US were low, inflation was high, the economy was in the dumps, the Soviets had invaded Afghanistan and American hostages were still being held in Iran. Then amidst it all out of nowhere, twenty American kids seemed to have done the impossible. A team of amateur and collegiate players bested the Soviet Union, whose team was composed of seasoned players that were professional in all but name only. They then went on to beat Finland for a gold medal – the impossible became possible giving us a miracle on ice.

Slightly more than thirty years later, we find ourselves in similar circumstances. Our economy is struggling to recover, gas prices are climbing, we are bogged down in three conflicts overseas, our politicians have locked ideological horns over our mounting debt, and overall people are not feeling as optimistic. And then again out of nowhere, a group of two dozen young men, not much older than the members of the 1980 US Olympic hockey, members of SEAL Team Six, achieved what was looking to be more and more impossible.

If the celebrations on the streets Sunday night were celebrating that in the face of so much challenge and adversity – we are celebrating that we as a nation are still here. If the celebrants are declaring that the impossible can become possible, then they are no circus act and are the furthest thing from becoming like our enemies.

These motifs of celebration is what I understand underlie not just Purim but Hanukkah as well. Against all odds, and in light of every attempt to destroy us, the world we seek to create endures. The impossible has become possible. And so I shall sing “Am Yisrael Chai” and chant “USA! USA!”