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Resisting Corporate Corruption, 3rd Edition by Stephen V. Arbogast

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Essay 5Underappreciated Origins of the Financial Crisis – A Personal Memoir

Between 1972, When I Joined Exxon’s Treasurer’s Department, and retirement in 2004, Wall Street changed a great deal. These were structural changes, and they exerted great influence on ethics decisions at all levels. Much of this story has been told in the accounts of the financial crisis. It is hard, however, to stay focused on this structural evolution while the histories are recounting what happened, who was responsible and what caused it. Most accounts also don’t go back far enough.

This essay attempts to remedy these shortcomings by summarizing Wall Street’s structural evolution. To do this, it looks at Wall Street through two lenses. One is the competitive strategy model most prominently associated with Michael Porter of Harvard Business School. The author will also offer personal reminiscences of how banking changed during his thirty-two years at Exxon Treasury. These two lenses should help students to integrate large structural forces with the personal choice issues they encounter in the case studies.

My dealings with Wall Street unfolded over three periods: 1973–75, 1986–89, and 1997–2004. During the first, I was a new analyst in the Corporate Finance division; this group housed Exxon’s investment banking relationships and did its capital market funding. During the second, I was responsible for Exxon’s capital market deals. From 1986–89, we did more than $3 billion of financing. The deals varied ...

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