Jeffery Lay came all the way to Lower Manhattan from his home in Ohio to express his anger toward Wall Street. But he doesn’t want to "occupy" Wall Street; he wants the Pentagon to run it. Lay sat down with The Daily Beast in the well-appointed mezzanine of the Trump Hotel in SoHo to discuss his new book, TOPGUN on Wall Street: Why the United States Military Should Run Corporate America, and his concerns about the present state of the banking system.
Lay is a former Navy lieutenant commander who spent nearly two decades flying F-14s as a highly decorated fighter pilot before retiring in 2000 to join the financial industry. His experience, particularly at Neuberger Berman, a subsidiary of Lehman Brothers, left him with a sense of disgust at the lack of accountability in high finance and corporate America. But the clean-cut Naval Academy grad hasn’t abandoned his profession. He is still in finance, doing wealth management for high net-worth individuals. And he hasn’t become a raging leftist either—he named his daughter Reagan for a reason. But his critiques of Wall Street and corporate culture put him in unlikely league with the protesters formerly of Zuccotti Park.
Lay offers an alternate model for the financial world. He thinks it should run more like the military—not in the sense that stockbrokers should have immaculately polished shoes or that hostile takeovers should be accomplished with heavy artillery. But it should operate with a certain sense of accountability, honor, and tradition. He is a Tory Capitalist.
In Lay’s eyes, working in the financial industry should be “an honorable profession.” One filled with “good people who wake up and say, 'What I can do to help people today?' ” He thinks that it needs to embrace the military ideal of “service before self.” The message he preaches is that “sometimes it just isn’t worth it, you don’t have to make every single trade, you don’t have to make every single investment, you don’t have to do anything because preservation is more important than dissipation.” Instead, Lay urges the return to the institutional reverence that defined Wall Street in the days before investment banks were publically held. He isn’t concerned with whether the banks are publicly or privately traded, but he mourns the loss of esprit de corps that once defined these firms. While the Navy still maintains the spirit of John Paul Jones, Lay sees Lehman Brothers's downfall as springing from its abandonment of the desire to be an “organization built in the image of Bobbie Lehman.”
Lay thinks Wall Street needs to embrace the military ideal of “service before self.”
Like many across the political spectrum, Lay shudders in disgust that Dick Fuld, the former chair of Lehman Brothers, hasn’t been held criminally responsible for his role in the meltdown. He rages at the memory of watching Lehman employees “walk out of the building at 745 7th Avenue, Lehman’s New York headquarters] with their lives in boxes. Every person ... was probably a good person and just shell-shocked. You know who else walked out of that building? Dick Fuld. You know how much money he took away the year before that? A lot of money. You know who still has a job today? Dick Fuld.” He wonders, “Where’s the accountability in that?”
Lay, however, is no fan of “Dodd-Frank solutions and all these types of regulation that come down.” In fact, he bristles at the more redistributive aspects of Occupy Wall Street. “If you’re good at what you do, then you deserve to make a lot of money. This is capitalism; this isn’t some altruistic socialist idea." He’s not concerned that those who perform well might receive excessive rewards—he’s fine with that.
Instead, Lay embraces a more conservative, and perhaps even somewhat paternalistic mindset, that an employer should take a certain fiduciary responsibility for its employees. He sees the necessity for CEOs to feel responsible “not just to the shareholders but the stakeholders” as well. After all, in the military “you have to ... look out for those junior to you and not put them in harm’s way.” Lay goes on to note, “If you make rancidly bad decisions, you get held to account. You don’t just walk out the door with a monster severance. “
It's this final point that focuses the grievance Lay shares with the Occupiers. When he examines corporate actions, he asks, “Who does that really serve? Is it serving the long-term interests of every stakeholder, or is it serving the long- or the short-term interests of a limited number of stakeholders, which may be the board or the senior executives?” The difference is that Lay’s solution resides not in a idealistic future but the solidity of the past.
As Lay says, “Service before self is really what the military has become about. The idea that I’m not here for me, I’m a servant of others. That cuts to the cloth of leadership.” He thinks the corporate world needs to adopt that model, too.