Zia Rahman - In the Light of What We Know

The plan that day was to join my parents for a dinner they were hosting. A social event was not what I had had in mind, but my father suggested it might be diverting — not a banker in sight — and I could stay on through Sunday.

He was not there when I arrived. He had been in Trieste for a conference and was supposed to be on a flight back that morning, but, my mother explained, he’d got the departure time wrong when he booked his tickets. My mother could have sent me a message before I set off for Oxford, letting me know, but I suppose she had been looking forward to seeing me.

Except for my father, the party was complete when I arrived. There was Oswyn Hapgood, a middle-aged classics professor at All Souls, and his wife, Maud, the two of them standing in the drawing room, drinks in hand, sweet sherries the both of them, I’m sure. Of the two, Maud was the connection; she and my mother were fast friends — my mother explained from where but I cannot recall. I’m not sure now, in fact, if my father really liked Hapgood (perhaps that’s why he didn’t just ditch the ticket in hand and catch an earlier flight). Also invited was one of my father’s doctoral students, Nathan Littwack, a Rhodes Scholar originally from Philadelphia, ten years younger than I, who was, I learned, set to take up a professorship at Caltech only a few months later. He was very clever, and the terms my father had used when speaking of him suggested a friendship across the generational divide. Nathan was laying the table and seemed to know his way about the place.

With Nathan was Lauren. I say with , although that wasn’t immediately apparent. Lauren had the ease of so many Americans I’ve met, an air of familiarity with whatever environment they were placed in that some Europeans take for pushiness or even a sign of entitlement. I think it was a Hey, hon between them — from whom to whom I don’t remember — that tipped me off. It would be disingenuous of me not to confess that what was most striking about Lauren were her breasts. I would have bet my bottom dollar it was a push-up bra that made for the flawless curves.

My mother made introductions quickly before returning to the kitchen, where she was putting the finishing touches to dinner. She was assisted by Rehana, a Pakistani woman from Cowley, whom my parents retained as a housekeeper.

I set about helping Nathan. But when I couldn’t find what we called the nice cutlery in the drawer where it had always been kept, Nathan suggested I try the drawer on the other side of the hutch dresser. He was right. I can’t be the first visiting son or daughter to find unsettling the small ways home changes once the children have vacated the nest, even setting aside the agency of parents in instigating those changes. The nice cutlery had been in the drawer on the right for as long as we’d lived there. But that was the point. We no longer lived there, I reminded myself, but only they , and they could make their home in such image as suited them.

You’re in banking, I hear, said Oswyn Hapgood, his head leaning back. I could see his nostril hairs. His high forehead was fringed by a mat of tightly coiled silver hair and below, some way below, by two of the bushiest eyebrows ever to crawl the earth. Some people are said to have a face for radio, so the quip goes; Hapgood had a cranial arrangement for academe.

I am, I replied, and left it there.

Inserting herself into the pause I’d opened, my mother explained that I was a partner in the firm. At the time, she knew less than my father did about my work and certainly had no idea about the mounting difficulties I was facing at the firm. But I was surprised by the hint of pride in her voice. When I was growing up, my parents were never the sort to brag about their son, but in more recent years, I’ve noticed, there has come through something of the proud parent in them both, and in my mother particularly.

Who would think there’d be such drama in banking? added the professor.

His manner, his every gesture, suspended him on the brink of superciliousness, and I wondered if there was simply some shy man inside whose timidity had isolated him from the norms of acceptable social behavior. My mother refers to academia as “the Asylum.”

But gauche though he was, Hapgood was right. In the preceding twelve months, the British bank Northern Rock had been nationalized, mortgage lender Bradford & Bingley was wobbling precipitously, the stock markets had suffered their largest fall since September 11, 2001, and the European Central Bank had raised interest rates by twenty-five basis points. Even in that September of 2008, there had been more drama than I had seen in all my time in finance. American investment bank Bear Stearns, on its knees with huge liabilities, was bought for a paltry $2 a share by JPMorgan Chase. The giant U.S. mortgage lenders, Freddie Mac and Fannie Mae, were taken over by the government after the disclosure of $5 trillion in liabilities they couldn’t meet. Lehman Brothers — good God, Lehman Brothers — filed for bankruptcy protection. AIG, one of the largest companies in the world, was bailed out by the government, and in the meantime Treasury Secretary Henry Paulson proposed a massive taxpayer-funded rescue plan for the financial services industry: the Troubled Assets Relief Program. Less than forty-eight hours before I visited my parents, Washington Mutual went into receivership, making it the largest bank failure in U.S. history.

I’m in investment banking, I said to Hapgood. The trouble is in commercial banking — in lending. We don’t provide mortgages.

The distinction might seem disingenuous, but it was the one partners had been encouraged to draw where circumstances allowed it. And it might have been enough of an answer for Hapgood, but not, I see now, for anyone with a sharp intelligence.

In September 2008, I was still a partner of the firm, and the firm’s interests were mine and mine the firm’s. That, more or less, was what partnership meant, a united front of common interests. The first rule of the firm was not to do any interviews and to keep the firm out of the public view. Most people don’t really know what investment banking involves, and because of that ignorance, and because a mob is in too much of a hurry to bother with evidence or reason, it was best simply to stay out of the public eye. But the financial crisis was changing things. The firm had mobilized a PR machine, and the posture adopted in the face of public criticism was that the firm needed to do a better job explaining to people what it actually did, something the firm, head bowed and cap in hand, admitted it hadn’t been good at doing. It is what politicians do when confronting a hostile public: an expression of regret for failing to explain choices and decisions — which is no apology at all.

What I don’t understand, continued Hapgood, is how it is that so many banks could do so badly and yet pay their staff such large bonuses.

Some banks are doing well, I replied.

How did yours do?

It’s doing well, I said, although not too badly would have been closer to the mark.

And why is that?

Foresight, I think.

Come now. There has to be more to the explanation.

Hapgood wanted detail, and I could not see how to escape obliging him.

Let’s say you own a house. You’ve bought it with the help of a large mortgage, but you also have other debts. A personal loan to finance a car, perhaps. And, crucially, debts on your credit cards. Let’s say you’re currently meeting the minimum repayments on the cards, but you’re stretched, and if your repayment obligations were to rise you’d be in trouble. What do you do if interest rates rise and you can’t meet all your obligations?