Did coked-up bankers cause the financial crisis?

A former top drug adviser to the British government says a rampant cocaine culture within the banking industry spurred overly risky decisions.

By Bruce Kennedy Apr 17, 2013 2:57PM

Stock traders (copyright Digital Vision/SuperStock)Comedian Robin Williams, always good with a one-liner, once summed up his struggle with drug abuse via a punchline: "Cocaine is God's way of saying you're making too much money."

 

Well, TV's Mork may have been on to something. David Nutt, a controversial British professor, psychiatrist and neuropsychopharmacologist -- who was also the U.K.'s most senior government adviser on drug abuse -- believes cocaine contributed to the recent global financial crisis.

 

"Bankers use cocaine and got us into this terrible mess," he said in a recent interview with the U.K.'s Sunday Times (subscription required) -- adding that cocaine made many people in the financial sector overly confident and more open to taking additional risks.

 

Cocaine, he says, is a perfect drug for the industry's "culture of excitement and drive and more and more and more. It is a 'more' drug."

 

Nutt was dismissed from his government role in 2009 after commenting that there wasn't much difference between the harm caused by horseback riding and taking the drug Ecstasy, so some people are dubious about his conclusions.

 

But there is plenty of evidence to support the global financial sector's long-standing love affair with cocaine. A stimulant that is a status symbol and that is readily available around Wall Street, the City of London and other financial districts, coke has for years been the perfect drug for bankers.

 

"It's the same rush from doing a deal and doing cocaine," former equities analyst Neill Junor told Bloomberg in 2009. "The adulation from doing a deal spills into going for a beer and then a party -- it's an amorphous blob of energy."

 

And while managers may have known about a cocaine problem in their office, according to the Bloomberg report, many ignored it -- so long as the abusers continued to make money for their firms.

 

Just last year Business Insider put together a collection of some amazing but true stories regarding cocaine and financial types. Some of the low-lights include:

  • Court papers say Bernie Madoff, the former investment adviser and financier convicted of one of the largest fraud schemes in U.S. history, used to have so much cocaine at work that his colleagues called his office "The North Pole."

  • An account manager at Barclays (BCS) was sentenced to more than seven years in prison for selling cocaine from his work desk in an affluent London suburb.

  • Authorities raided a T.G.I. Friday's in Lower Manhattan in 2009, after reports that clientele from nearby Wall Street firms were buying large amounts of marijuana and cocaine at the restaurant's bar.

  • In his book "The Sellout," author Charlie Gasparino relates a tale of how former Bear Stearns CEO Jimmy Cayne kept an antacid bottle full of cocaine on his desk.

And then there's the feature published last summer in The Guardian, in which a young man who worked in “The City” for five years recounts how the financial sector's culture of drinking, cocaine and other drugs nearly did him in.

 

"There are striking parallels between drug addiction and aspects of banking," he told the newspaper. "Every junkie will say they're not addicted, they just want to take 'one more hit.' Many bankers say they want to get out of the industry, but not before one more bonus."

 

More on moneyNOW

111Comments
Apr 17, 2013 4:15PM
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I was a formally-trained LENDER for decades. Over that time, I saw both the Private Sector and the Banking Sector hire alumni and either Fast Track them or put them in Middle Management. In all of my engagements with these people, a few things were glaringly obvious; A) They were IN credit but were clueless of credit, budgets, Risk and collections. B) They were cliques. C) They wanted everything all of us had at that moment, even though it took us decades to get there. D) They were socially-networked, often married to others in the same industry or workplace. E) Senior management liked them because they were geared to butt-kissing much like elected officials are with lobbyists. F) They couldn't LEND. G) They were either drug or alcohol-oriented or both. H) They were psychopaths. If you stroked them, you got specialized treatment. If not, they would break the law to get you gone. I) They took our jobs and haven't done good things in them. THE FACT IS-- we might recover, but if we do, the damage done by these people will be hard to get undone.
Apr 17, 2013 4:11PM
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it really does not matter whether it was cocaine, beer or just bad judgement. many people in the industry got away with murder and at least as it relates to the usa, we have done nothing to fix the problem.
Apr 17, 2013 3:52PM
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Cocaine addicts have to resort to theft to fund their drug addiction.
And the best way to rob a bank is to own one, or to work at one apparently.

Therefore, they are addicted to high flying money transactions called derivatives, aka Financial Weapons of Mass Destruction.

But the banking industry, until recently at least, has been Too Big To Fail (or Jail). With these types of articles appearing, I am wondering if this will start to change.

Apr 17, 2013 4:36PM
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Yeah, blame it on a drug. The problem was and still is greed and egoism. Whether it's alcohol, drugs or sex that misleads you, it is still greed and ego at the root of the problem.
Apr 17, 2013 4:25PM
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A dirty secret of the bankster industry is how many banks have knowingly laundered drug money in the billions of dollars for cartels.  Their consciences get handily cast aside by their unbridled greed.  Some have been caught: e.g. Wachovia and HSBC.  The fines are a joke in contrast to the scale of the activity.
Apr 17, 2013 3:59PM
Apr 17, 2013 4:01PM
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The analogy is completely accurate.  Wouldn't shock me if this was the case.  wall street is all about the scorecard and the score is measured in money, and the better you do than your competition the bigger the rush.
Apr 17, 2013 4:38PM
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Drug addict bankers huh?  Now lets hear a story about the druglord politicians we have in office.

Apr 17, 2013 4:30PM
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Was just watching a show about the eighties, and same thing happened on Wall street in '87. He is probably right on the money.
Apr 17, 2013 3:23PM
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They mentioned this in the documentary "Inside Job".
Apr 17, 2013 4:32PM
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The problem is moreso in the types of people working these Wall Street jobs. Sadly, many of today's frat-boys, sorority girls, and athletes seeking an easy way through college choose business over engineering and liberal arts degrees. These animals bring their party culture to these very powerful corporations, and it spreads.

 

Sad, but true. I've seen it happen before my own eyes.

Apr 17, 2013 3:45PM
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I never particularly cared for coke; I just loved the way it smelled
Apr 17, 2013 4:13PM
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How come I always read that massive amounts of cocaine are found on hundred dollar bills? Not the 20's, 10's... us peons are used to hanging onto.
Apr 17, 2013 4:26PM
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This is all true.  I was in banking for several years, and while I wasn't involved in this stuff, I knew people that were.  It was actually much worse in the 80s, which was coincidentally around the time of the S&L scandals.
Apr 17, 2013 4:03PM
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It was politicians hooked on the other drugs. MONEY and POWER!!!
Apr 17, 2013 3:12PM
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All of a sudden "ripping out the eyes of their Muppet clients" takes on a whole new meaning.
Apr 17, 2013 4:18PM
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Pretty rampant among the professional accounting folks as well..... the "C" in CPA often stands for something other than certified....
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Anyone else noticed that this year opium production in Afghanistan has reached all time high after dropping to almost zero during the Taliban rule,

 

As they were against it on religious grounds and when the DEA told them to get rid of it they found it easy to do.

And that we invaded after about three years of almost no opium production.

 

And now that opium production is back on track we are leaving???

 

Is this the real reason behind 9/11 ???

 

 

Apr 17, 2013 4:39PM
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Watch out for Adderall. It is the new upper being used and widely prescribed for ADD.
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