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96 Cornell L. Rev. 1209 (2010-2011)
Chasing the Greased Pig down Wall Street: A Gatekeeper's Guide to the Psychology, Culture, and Ethics of Financial Risk Taking

handle is hein.journals/clqv96 and id is 1221 raw text is: ESSAY CHASING THE GREASED PIG DOWN WALL STREET: A GATEKEEPER'S GUIDE TO THE PSYCHOLOGY, CULTURE, AND ETHICS OF FINANCIAL RISK TAKING Donald C. Langevoortt INTRODUCTION ................................................. 1209 I. SKETCHING OUT THE COGNITIVE MAP .................... 1215 A. The Centrality of Corporate Culture................1215 B. Adaptive Cultures................................... 1217 11. INSTITUTIONAL RISK PERCEYTION......................... 1221 III. THREE VARIATIONS ON A THEME BY CHUCK PRINCE ....... 1224 A. Feeling the Music .................................. 1224 B. Dance Competition................................. 1228 C. Dancing for the Crowd ............................. 1231 IV. GOLDMAN SACHS AND GOD'S WORK ...................... 1234 V. INDIVIDUALS WITHIN CULTURES .......................... 1241 CONCLUSION ................................................... 1243 INTRODUCTION Of all the questions about why the recent financial mess hap- pened, the most perplexing have to do with the immense risk taken on by supposedly sophisticated financial institutions.' There were many different kinds of transactions that shifted subprime mortgage t Thomas Aquinas Reynolds Professor of Law, Georgetown University Law Center. This Essay is an extension of the Day Family Ethics Lecture given at Cornell University in April, 2010. My thanks to Claire Hill, Dana Radcliffe, Mitt Regan, Avishalom Tor, at- tendees at the Day Lecture at Cornell, and workshop participants at the University of West- ern Ontario for their comments and suggestions. I Various commentators provide helpful overviews of the crisis and its institutional and regulatory context. See generally Markus K. Brunnermeter, Deciphering the Liquidity and Credit Crunch 2007-2008, 23J. ECON. PERSP. 77, 82-98 (2009) (providing an event logbook of the 2007-2008 financial crisis and discussing the amplifying mechanisms that can turn shocks into financial meltdowns); Gary Gorton, The Subprime Panic, 15 EUR. FIN. MGMT. 10, 12-37 (2009) (describing the intricate chain of risk distribution that lead to the financial panic); Charles K. Whitehead, Reframing Financial Regulation, 90 B.U. L. REV. 1, 16-36 (2010) (tracing the evolution and regulation of financial markets and explaining how such changes led to riskier behavior by financial intermediaries). 1209

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