»  National Review Online

January 5, 2001

  Race on Wall Street


Employees to Sue Microsoft for Discrimination
        By D. Ian Hopper, Associated Press Writer
        Jan 3, 2001 — 12:12 AM

WASHINGTON (AP) — Seven current and former Microsoft Corp. employees are planning to sue the computer software maker for discrimination, citing racial bias, the plaintiffs' lawyers said Tuesday. The suit, to be filed in U.S. District Court for the District of Columbia on Wednesday, asks for $5 billion, the lawyers said in a statement. This is the second bias suit against the Redmond, Wash., company in the past three months …


Here is a Wall Street story. Through most of the 1990s I worked for a big Wall Street investment bank. I wasn't a hot-shot trader or a high-flying executive, just a back-office worker bee. Most of my work was in a small department — 12 to 16 people — that kept tabs on the credit-worthiness of the firms we did business with. It was a pretty stable department, with a happy workforce under a good boss. Some of the people who were there when I arrived were still there when I left.

My department had a small legal section attached. The firm had originally been a bond brokerage, so most of our business concerned setting up deals with other banks or big institutional investors to buy, sell, borrow or lend different kinds of bonds, or to arrange complex cross-bets with these other counterparties on the movement of interest rates or currency exchange rates. All of these deals needed careful legal documentation to ensure that every party to a deal understood things in the same light, and that the firm's hindquarters were adequately covered if for some reason a deal ended up in a courtroom, as occasionally happened.

In 1991 the head of this legal section, with three or four administrators and paralegals working under him, was an African American who I shall call Jason. At the time he was the only black person in the department. This was, I repeat, a friendly department, under a boss much loved by his employees — an old Wall Street hand who knew everybody and had seen everything, and who took good care of his people at bonus time. There was a high level of banter in the department, some of it politically incorrect — the black humor and rough manners of the trading floor percolate up to the back offices in these places. It was all understood to be in good fun, though, and I never saw anybody take offense.

Here is an example of what I mean. At the time of the Rodney King riots, management let it be known that people could leave early if they chose, since there was some fear that New York City might erupt. We put on our coats and headed for the elevator. While we were waiting, I turned to Jason and said:  "Oh, by the way, Jason. If you're planning to go out this evening, I could really use a new VCR."  Everybody, including Jason, laughed. OK, it wasn't in the best of taste, but it was nothing compared with the kinds of exchanges you hear on the trading floor. Certainly it wasn't particularly out of line with our normal departmental banter. (Jason's predecessor had been Jewish, and at one point had had two out of three Jewish assistants. The rest of the department used to refer to the legal section as "the ghetto".)

After a while I began to hear things about Jason and our boss. The boss wasn't satisfied with Jason's work. He took too much time off. (Yes, he did take rather a lot.) He didn't understand some of the complicated deals we were doing. He was lazy and cut corners. Jason, contrariwise, seemed to have a low opinion of the boss. He was crude and insensitive. He made impossible demands. He was short-tempered. Jason, I should note, had graduated from law school in the early 1980s, and had taken in all the psycho- and socio-babble of early Political Correctness. Our boss had graduated from business school in the 1950s, and regarded PC as a bit of a joke, though — out of the context of the banter mentioned above — he was wise enough to watch his tongue when sensitive topics came up. Fundamentally the whole thing was, as far as I could see, just a clash of personalities. It ended with Jason resigning. Soon afterwards I heard that he was suing the firm for "racial discrimination".

The case dragged on for a couple of years, then was settled out of court. The firm paid Jason $250,000 for the "discrimination" he'd suffered.

Fast forward four years. Same department, same boss. The legal team, however, had moved out of our department, had placed themselves under the control of the firm's legal department. The lawyer who ran the team — Jason's successor, a Jewish white man — no longer reported to our boss, and was located at the other end of the building. We still had some necessary dealings with them, though, and I knew the whole team very well. One recent hire was an African American woman I shall call Margaret. Margaret had grown up dirt poor in one of the deep-south states, come to New York, improved herself through night school, and landed this job performing minor clerical functions for our firm. She had done well: Wall Street firms, even at the low level I am discussing here, are exceptionally good to their back-office people. They are very good employers, if you don't mind hard work.

Margaret was rather shy, a bit sensitive about her background, I think, but good-natured and cheerful, with no chip on her shoulder that I could detect. You wouldn't have called her the sharpest knife in the drawer; but then, her duties didn't require her to be. Her boss, the guy who had replaced Jason, was, to tell the truth of the matter, not blessed with a very agreeable personality, but he was lawyer all the way through — the kind of person who, if you asked him what time it was, would give you an answer broken out in sections, subsections and paragraphs, with footnotes for clarification.

My original boss, the one who had failed to get on with Jason, retired. Shortly afterwards I myself left the firm. About a year after the latter event I happened to be talking to my old boss — we had kept in touch. "Oh, by the way," he said, "I found myself sitting on the bus the other day with guess who? Margaret, from the legal section." Was she still with the firm? I asked. "No. Matter of fact, she's suing them." For what? "What d'you think?" Margaret, it turned out, had a suit for racial discrimination going against her boss, the lawyer.

Now, I worked with those people — the credit department and their legal section — for eight years, during which time three African American employees had come and gone. Two of them had ended up with a lawsuit against the firm for racial discrimination, citing a different boss in the two cases. Furthermore, in daily interaction with these people across some two thousand days, I had witnessed nothing — setting aside the harmless kind of banter I mentioned above — that struck me as offensive, inflammatory or discriminatory. Two out of three: sixty-seven per cent.

I know a couple of very senior people at the firm — managing directors — and broached the subject with one of them. He shrugged. "Cost of doing business." But did these people have any actual case? "No, of course not. It's just a shakedown." Why didn't the firm fight these cases? (They are invariably settled out of court.) "Are you kidding? The publicity! Think of Texaco!" Couldn't they vet potential employees for these tendencies at hiring time? "It's not the employees, it's the civil-right attorneys. Whole firms of them. They go trawling around Wall Street looking for black employees, tell them how much money they can get them for a discrimination complaint. It's hard to resist, you know. Could you resist it?" But wasn't the result of all this, that Wall Street firms would become reluctant to hire African Americans? "Don't be silly. Imagine we stopped hiring them — think what the civil rights crowd would make of that! No, it's just a cost of doing business. Like employee pilferage in a supermarket. You make a certain allowance for it."

Perhaps I am naive, but this all seems very shocking to me. Like employee pilferage in a supermarket. Yes, but that is illegal, and also immoral. Suppose you are a supermarket worker, and you see a fellow-worker sneaking off with some merchandise — how do you feel about that person? What my ex-colleagues were doing was obviously not illegal, but surely it was immoral. Wasn't it?

It is easy to understand, and even to sympathize, with the point of view of everyone concerned here. The employee: Some civil-rights lawyer invites him to lunch and explains that he can get five times his annual salary, in cash, for signing a couple of depositions. The lawyer: "Hey, gotta make a living. And these are the laws !" The firm: "Cost of doing business. We are 'deep pockets,' got to expect this sort of thing. Our shareholders wouldn't like a lot of publicity over something like that, so we settle."

Yes, everybody's making a rational choice … but it's wrong.

You may say: Well, perhaps there really was some discrimination going on there that you just didn't see. To which I reply: Gimme a break. I worked in that department for years, and knew those people as well as I know some of my own family members. All of them, without exception, were decent middle-class Americans. Which is to say, they lived in terror of being thought "intolerant", "divisive", "discriminatory" or "mean-spirited". They all chirped "Have a nice day!" when colleagues got off the elevator. They all said "Hangin' in there!" when you asked them how they were coping. That dash of Wall Street black humor aside, these were citizens of what Florence King calls "The Republic of Nice", who would no more have committed an act of racial insensitivity in the workplace than they would have pushed their grandmothers downstairs. Like practically all late-20th-century middle-class Americans, they had standards of manners and etiquette that would have put the courtiers of Louis XIV to shame.

Perhaps the firm had, for racial reasons, failed to promote those African Americans as quickly as other employees? Gimme another break. Every big corporation in the U.S. is desperate to get African Americans into senior positions. This especially applies in Wall Street firms, which have further to go than most. In my firm the pattern was: Mail Room, approx. 90 per cent black. Cafeteria: 100 per cent Hispanic. Maintenance staff: Looks like America — better yet, like New York City. Back offices: My department probably pretty representative, usually one black face in 12 or 16. Trading floor: the same, a black face every dozen desks or so. Senior management: practically all white. Now, these people are not fools. They know this won't do. They are pathetically anxious to get some "diversity" into their annual reports. Discrimination? Sorry, don't believe it.

If I'm right, and it's all just a shakedown driven by avaricious lawyers, how upset should we be about this? My own answer is: Quite upset. As I pointed out above, everybody involved is acting from rational, if not entirely respectable, motives. The real problem is that our laws encourage this sort of immorality. This means there is something wrong with our laws. Doesn't it?