The Costs of Financial Outing

The Costs of Financial Outing
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Lifting the veil on who spends what, gets paid what and has lost what is the sport of the moment. But when it comes to money matters, few are honest with others--or even themselves. What could be the ultimate cost of a new world of currency openness?

Among the radical shifts emerging with the new recession is a fascination with financial outing. Last week, Sandy Weill was outed for flying his family to Cabo for the holidays on a Global Express with $13,000 carpets. Goldman Sachs was shamed into canceling its annual hedge fund conference in Miami after Morgan Stanley was lambasted for scheduling trips for top brokers to Monte Carlo (since cancelled as well). The perks of Mayor Bloomberg's employees--including flying on Falcon 900s and staying in $400-a night hotel rooms at the Four Seasons--were splashed across the front page of the New York Times. All these, of course come on the heels of the evisceration of John Thain for furnishing his Merrill Lynch office with items like a $1,400 wastebasket.

Masters of the Universe have been reduced to greedy villains, but they are not going to be allowed to slink off to enjoy their riches unobserved. No, thanks to a global network of irate citizens who are already sharing in the cost of the their colossal miscalculations, their spending is being exposed for vilification in countless papers and blogs. Suddenly, objects like private planes--considered trophies only months ago--have become high-profile hot potatoes. CEOs can't unload the symbols of their excess fast enough. Dick Fuld's wife had the poor judgment of shopping in Hermes and the reporters caught her in the act, even though she spurned a tell-tale orange bag. Spending is no longer a private matter but an outrage ripe for the public to gloat over. How quickly the tables have turned. For those who gladly staked their status to their bonuses, the rules have changed; and many are seeing their money used, not to define them, but to malign them.

The glee with which the masses skewer the spendthrifts comes from years of having suffered under their insensitive flaunting. As writer Leslie Bennetts reflects in a new book of essays, The Secret Currency of Love: the Unabashed Truth about Women, Money and Relationships, "the excessive wealth of people who rub your nose in it can really challenge your character. It's easy to sustain a tolerant, live-and-let-live attitude about rich people who are gracious and respectful of others. And yet privilege can also breed arrogance, a sense of entitlement, and condescension toward those of more modest means. Some people wield their money like a weapon... The careless putdowns range from insensitivity to outright insults, and they can carry a memorable sting." Well, no wonder all those who have been stung are exulting.

But it's not just the spending that is coming out into the open. Salaries, bonuses and stock values are being broadcast daily. A recent article, which might have been titled "The Biggest Losers," documented the decimation of the stock values held by titans such as Weill, Ken Lewis and Vikram Pandit. And last week, after the revelation that bonus bonanzas took place by bailed out banks, President Obama swiftly announced an end to bonuses and golden parachutes and a cap on executive compensation for those working at companies that take TARP funds. (Those Merrill Lynch bonus recipients worry that they, too, may be outed and forced to return the spoils.)

The super wealthy are not the only ones who can no longer keep their economic information under wraps, though. A whole generation of Americans is readjusting to a new financial reality. They have to, because with unemployment at its highest level in sixteen years and the massive destruction of wealth, many can no longer afford their homes, their kids' tuitions, their monthly bills. Keeping up appearances is hardly worth worrying about, and besides facing up to reduced circumstances is easier when you can talk about it. In fact, victims of foreclosures and Madoff now frequent Tv talk shows and the internet, revealing in great detail their economic demise. Last Friday's Wall Street Journal ran an article entitled "Connected, Fabulous...and Broke" in which a Miami real estate broker comes clean: "I was flying so high, and now I'm crashing down. It was greed--pure and simple."

Last week, the list of Madoff victims was released. Anyone with access to the internet could scour Exhibit A. Famous folk like John Malkovich and even Madoff's own lawyer, Ira Sorkin, who had not revealed their losses were exposed along with hundreds of others. "I spent a half hour reading the names," confided one typical New Yorker, "and found three people I knew."

It's almost as if the obsession with celebrities has been replaced by an obsession with other people's money. Why? In her introduction, Hilary Black, the editor of The Secret Currency of Love argues that "We are, I believe, fascinated by the other people's financial issues because we all want to know the same things: Is she like me? Is her life better? Worse? Does she have more than I do? Is what I have enough? In this regard, these essays offer a peek through the keyhole of a door that is often locked tight." Until recently, that is. As financial outing and going-broke tell-alls gain momentum, the danger is that this spawns another kind of weapon to be wielded. Call it the tyranny of transparency, and try to be honest about how you will feel when your bank transactions are held up to scrutiny.

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