05/26/2010 10:31 am ET | Updated May 25, 2011

The Crassest Generation

The four Goldman Sachs executives who testified before Senator Carl Levin's Permanent Subcommittee on Investigations were striking in many respects, but one thing was apparent before they opened their mouths: their relative youth. There was hardly a gray hair on their heads. They were well-groomed, well-mannered, and well-prepared by legal counsel. They were all undoubtedly well-educated and exceedingly smart in a technical sense - but where was their experience, their judgment, their self-awareness?

My father used to refer occasionally to some people as "educated fools" - people who had book-smarts but who had relatively little practical experience. There were four "educated fools" on display before Senator Levin and his Committee. The lawyers who had prepped these executives were skilled in determining the legal parameters of permissible action, but so many lawyers - and their clients - often overlook the fact that just because an action may be legal doesn't mean that it should be undertaken.

The Goldman Sachs defense is relatively simple: we were simply making a market, providing a legal exchange in which willing - and presumably sophisticated - buyers and sellers could meet and place their bets. The fact that Goldman Sachs had concluded that some of the products offered on that market (products which they had helped create) were "crappy," or worse, was irrelevant. It's a caveat emptor world, after all, isn't it?

The problem with this explanation is that it divests Wall Street of any moral responsibility for its actions. Take the case of synthetic collateralized debt obligations - CDOs. As I understand one aspect of this business, some Wall Street firms created investment vehicles that were nothing more than bets on the value of assets that the firms themselves never owned. Like you buying fire insurance on your neighbor's house, or life insurance on an unrelated coworker.

There's another analogy that comes to mind: is there anything wrong with creating a CDO or other type of investment vehicle that allows investors (sophisticated or otherwise) to speculate on the future street value of a kilogram of pure cocaine or 1,000 purloined oxycontin tablets? The underlying assets are, of course, illegal, but a market which enables you bet on their future prices is also a market of intangibles: you can place your bet without ever owning or even touching the controlled substances.

Is there anything wrong with such a market? Are all markets and market-makers good, regardless of what it is that is being sold on the market?

My sense is that most Americans would oppose the creation of such markets. American capitalism has, throughout its history, been tempered by forces and values that correct "irrational exuberance" and overzealous markets that ride roughshod over more fundamental values.

Is making the sale all that really matters? If so, what signals are we sending to our young people and, especially, to future business leaders?

Throughout its history, the leadership of Goldman Sachs has swung back and forth between investment bankers and traders. Neither talent is inherently better or worse than the other. What matters most, however, are the values that come from that leadership.

There was a time not so long ago when Goldman Sachs was co-lead by a truly remarkable and inspiring individual, John C. Whitehead. His modest and unassuming autobiography, "A Life In Leadership: From D-Day to Ground Zero," should be mandatory reading for every young American in a business school and for everyone who works on Wall Street.

John Whitehead has prospered on Wall Street while also dedicating a significant part of his career to his country and to his community: he was a war hero who landed in France on D-Day in World War II, served as Deputy Secretary of State in the Reagan Administration, has been a major philanthropist who has also served on countless nonprofit boards, and was the Founding Chairman of the Lower Manhattan Development Commission that helped rebuild lower Manhattan after September 11.

Senator Levin's subcommittee hearing exposed a set of values that can only be deemed crass. As the Senator observed, the courts will ultimately determine whether illegal behavior occurred. The court of American public opinion, however, will render its own judgment. In the meantime, we should pause and ask whatever happened to Wall Street's greatest generation?