The man on the bridge ten years ago and the bank robber who took people hostage at an apartment viewing aren’t connected. They never met each other. The only thing they really have in common is moral hazard. That’s a banking term, of course. Someone had to come up with it to describe the way the 1nancial markets work, because the fact that banks are immoral is so obvious to us that simply calling them “immoral” wasn’t enough. We needed a way to describe the fact that it’s so unlikely that a bank would ever behave morally that it can only be considered a risk for them even to try. The man on the bridge gave his money to a bank so that they could make “secure investments,” because all investments were secure in those days. Then the man used these secure investments as security against loans, and then he took out new loans to pay oP the old ones. “Everyone does this,” the bank said, and the man thought: “They’re the ones who should know.” Then one day all of a sudden nothing was secure anymore. It was called a crisis in the 1nancial markets, a bank crash, even though the only ones who crash are people. The banks are still there, the 1nancial markets have no heart that can be broken, but for the man on the bridge, a whole life’s savings had been replaced by a mountain of debt, and no one could explain how that had happened. When the man pointed out that the bank had promised that this was “entirely risk-free,” the bank threw out its arms and said: “Nothing’s entirely risk-free, you should have known what you were getting into, you shouldn’t have given us your money.”
So the man went to another bank to borrow money to pay oP the debts he now had because the 1rst bank had lost all his savings. He explained to the second bank that he might lose his business otherwise, then his home, and he told them he had two children. The second bank nodded and was very
understanding, but a woman who worked there told him: “You’ve suPered what we call moral hazard.”
The man didn’t understand, so the woman explained that moral hazard is “when one party in an agreement is protected against the negative consequences of its own actions.” When the man still didn’t understand, the woman sighed and said: “It’s when two idiots are sitting on a creaking tree branch, and the one closest to the trunk is holding the saw.” The man was still blinking uncomprehendingly, so the woman raised her eyebrows and explained: “You’re the idiot furthest away from the trunk. The bank’s going to saw the branch oP to save itself. Because the bank hasn’t lost any of its own money here, just yours, because you’re the idiot who let them hold the saw.” Then she calmly gathered together the man’s papers, handed them back to him, and told him that she wasn’t going to authorize a loan.
“But it isn’t my fault that they lost all my money!” the man exclaimed.
The woman looked at him coolly and declared: “Yes it is. Because you shouldn’t have given them your money.”
Ten years later a bank robber walks into an apartment viewing. The bank robber had never had enough money to hear a woman in a bank talk about moral hazard, but the bank robber had a mother who often said that “if you want to make God laugh, tell Him your plans,” and sometimes that comes down to the same thing. The bank robber was only seven years old the 1rst time this was said, and that may well be a little early to hear something of that nature, because it pretty much means “life can go all sorts of diPerent ways, but it will probably go wrong.” Even seven-year-olds understand that. They also understand that if their mom says she doesn’t like making plans, and even if she never plans to get drunk, she still ends up getting drunk a little too often for it to be a coincidence. The seven-year-old swore never to start drinking hard liquor and never to become an adult, and managed to keep half that promise.
And moral hazard? The seven-year-old learned about that just before Christmas Eve the same year. When Mom kneeled down on the kitchen Aoor
and lurched into a hug that left the seven-year-old’s hair peppered with cigarette ash. In a voice shaken by sobs, the seven-year-old’s mom said: “Please don’t be upset with me, don’t shout at me, it wasn’t actually my fault.” The child didn’t understand exactly what that meant, but slowly began to realize that whatever it was, it might have some connection to the fact that the child had spent the past month selling Christmas editions of magazines every day after school, and had given all the money to Mom so she could buy food for Christmas. The child looked into the mother’s eyes, they were shiny with alcohol and tears, intoxication and self-loathing. She wept as she clung to the child. She whispered: “You shouldn’t have given me the money.” That was the closest the woman ever came to asking her child for forgiveness.
The bank robber often thinks about that to this day. Not about how terrible it was, but about how odd it is that you can’t hate your mom. That it still doesn’t feel like it was her fault.
They were evicted from their apartment the following February, and the bank robber swore never to become a parent, and, when the bank robber ended up becoming a parent anyway, swore never to become a chaotic parent. The sort who can’t cope with being an adult, the sort who can’t pay bills and has nowhere to live with their kids.
And God laughed.
The man on the bridge wrote a letter to the woman at the bank who had told him about moral hazard. He wrote down exactly what he wanted her to hear. Then he jumped. The woman at the bank has been carrying that letter in her handbag for ten years. Then she met the bank robber.