No industry for old men: a finance doyen's personal history of, and polemic on, modern banking
Stanislas Yassukovich’s Two Lives: A Social and Financial Memoir, in which he recounts his own life, as well as the lives of his father and the Eurobond market (of which he was a progenitor) might be a first of its kind. It is a bond man’s — and bond market’s — Bildungsroman, as well as a polemic against the state of banking and a klaxon sounding the end of capitalism as we know it.
The man needs little introduction in the Eurobond world. One of high finance’s éminences grises, he formed and was managing director of the European Banking Co — one of the first major pan-European investment banks — served as deputy chairman of the London Stock Exchange, chairman of the Securities and Futures Authority and finally chairman of Merrill Lynch in Europe. Yassukovich is therefore something like a living monument to Euromarket history.
Two Lives is peppered with tales of the kind of innocent luxury found in F Scott Fitzgerald, its prose reminiscent of that author and, strangely, Anthony Trollope. Yassukovich refers several times to both authors, and their styles have clearly influenced his. “We sealed our brief interlude with a chaste kiss,” he writes of an encounter during his brief tenure with the US Marines.
He skillfully sets bijoux from the history of banking in their geopolitical, and sometimes social, contexts, intermingling them with the shaggy dog stories he admits to loving. Anecdotes from his coming of age, his family history, and the life of his “heroine”, the Eurobond market, are often richly and entertainingly told.
Their telling gives a clue to how the author perceives his own life, as well as his distaste for the present and future of banking. For it is his love of detail — of the smell, touch and sound of a memory and its inherent personal value — that imbued his professional life. And this texture is just what seems to be missing from modern life, with its immediacy, distance between counterparts, and haste. Two Lives is very much not hasty.
His detailed narratives, from youthful galas in Long Island to brief vignettes of military history, to specific financial deals and even the temperaments of old Russian soldiers, have the charm of tales told by a man who has lived in a more tactile world than our own.
Capturing the dizzying speed of technological advance in finance, he writes: “It is as though I had helped paint the animals in the caves at Lascaux, and now watched a nature film on television,” about them.
The line is telling, for it is the passivity of the modern financial world that Yassukovich sees as threatening its downfall.
The rot began a long time ago, according to Yassukovich. The original fall began with “the age of accommodation” that began in the 17th century for spawning “a plethora of devices to obtain money on commodities and transactions that never were”. This familiar sounding cocktail resulted in a 1763 meltdown in Amsterdam and Hamburg.
Yassukovich has similar harsh words for the Big Bang of 1986, which he saw as “a turning point in the wrong direction.”
There are few things Yassukovich likes about the modern banking world.
If the first half of the book is a narrative of a structured, purposed life, the second half is about that life, set in a narrative spinning out of control.
Covenant-lite loans are a “breakdown in basic banking principles”; regulators no longer have the ability or talent to be immersed in their markets enough to regulate them; attempts at self-governance are legally unenforceable and futile; ‘reputation’ and ‘responsibility’ have no real meaning in the modern corporate culture; savers have no choice but to put their money with institutions that have no sense of the duty of ownership.
Other laments are stranger. Yassukovich is devoted to the idea of good breeding, as regards his own “pedigree” and his lifelong hobby of all things horses. He bemoans the lack of it as contributing to the downfall of modern culture: “It is… inconceivable that breeding should have obvious consequences for animals but not for humans and to so claim is an example of human arrogance.”
Few of Yassukovich’s readers are likely to be convinced by this reductive logic, which pops up throughout the memoir in variations. ‘Breeding’ in animals is meant to produce certain traits often at the expense of others, such as speed in exchange for lungs that tend to bleed. Specific traits can be bred in a single generation because, after centuries of intentional inbreeding, the gene pool is shallower. Few would extol the Habsburgs’ in-house approach to legacy maintenance. It led to the famously inbred Charles II of Spain, whose pathologist declared after his autopsy that “he had one testicle, black as coal, and his head was full of water”. And the downfall of the City as he sees it certainly has nothing to do with its diversification, as implied late in the book.
But Two Lives offers much, despite these faults. Yassukovich’s telling of his own career is run through with a distinct moral ribbon that doesn’t fade much in a younger reader’s eye.
“Many of the negative evolutions in corporate structure, ill-conceived business models, management deficiencies, poor and conflicted regulation can be ascribed to a failure by shareholders to behave responsibly, and exercise the rights of ownership,” he writes.
It is an important complaint, and one he’s made before. In 2005, Yassukovich took to the pages of The Spectator to make a prescient warning to the finance industry.
In ‘Whatever happened to shame?’, Yassukovich aimed a volley of accusations at the financial sector and its regulators that would prove perfectly true in the years that followed, including regulators levying insignificant fines and settling cases without admissions of guilt.
“So the regulators’ ultimate sanction has become a nuclear option, impossible to use,” Yassukovich wrote.
He also warned of a loss of faith in the financial system. Individual savers have no choice but to put their money with a few giant institutions operating in a culture of impunity.
“A lack of confidence in the integrity of the financial system eventually translates into a crisis of confidence in capitalism as a whole,” Yassukovich warned in that article. “The City cannot prosper in moral isolation from the general public. Unless it rediscovers the difference between right and wrong — as a concept separate from technical compliance with written rules — it risks damaging the entire economic system on which its prosperity depends.”
Sadly, the author seems to have lost hope in the strength of his invective. In Two Lives, he laments: “Following the current meltdown in the world’s geopolitical and financial fabric merely reminds one how lucky one was to have lived out its last moments of sanity.”
The fatalism continues, taking a darker tone. “As the sun sets on Western civilisation, I am sorry for my grandchildren and their grandchildren, but my patisee before lunch, and my rosé with, will see me out.”
Two Lives is a compendious, but deeply knowledgeable and entertaining read. One must hope it is picked up by the generation Yassukovich fears is already damned.