I’ve been thinking about the “Giving Pledge,” a campaign championed by Bill Gates and Warren Buffett. They're asking fellow members of the uber rich to pledge 50+ percent of their fortunes to charities—more money to philanthropy and less to family. Among the billionaires who have taken the “pledge” are Larry Ellison, Michael Bloomberg, Tom Monaghan, Oprah Winfrey, George Soros and other members from the who’s who of wealth.

These pledges are extraordinary acts of generosity.

Nobody is forcing Warren Buffett to give away 99 percent of his fortune. Nobody is forcing forty or so families to take the pledge. You can read their rationales on the Giving Pledge Website—it’s the kind of thinking that illustrates why they were able to build great fortunes in the first place.

But how will the Giving Pledge address our country’s greatest needs?

Like infrastructure…

Personally, I would be happy to rename the George Washington Bridge if somebody fixes the congestion between New York and New Jersey during rush hour. I doubt George would mind either. But to my knowledge, nobody is standing in line to donate a bridge at the cost of $6 or $7 billion.

Or protection…

Sometimes, governments write checks that no one else will. Is there a charity that underwrites police training? Or one that buys bullets for our soldiers in Iraq and Afghanistan? Or new computers for the Pentagon?

Outright gifts to a charity, no matter how well intentioned, may not pay for what we need most. And they definitely bite into the government’s tax revenues.

Fortune Magazine estimated that $600 billion will flow to charities, if every member of the Forbes 400 takes the Pledge. That’s a beautiful thing, right? But what about Uncle Sam and the US deficit? If estate taxes return to, say 40 percent, that $600 billion costs our government 240 billion in tax revenues—about 6.8 percent of total spending or 1.8 percent of our national debt.

Would you prefer someone to pay down $20 billion of the US debt or donate their fortune for the humane treatment of fire ants?

I know the preceding question sounds hyperbolic. And there are many reasons to wrest control from Uncle Sam for how money is spent. Some arguments include: “Government is inefficient.” “The families earned the money—they should control the disposition.” “Why should anybody be forced to flush money down a black hole?” "Gifts, from many different donors, will fund a broad range of social needs." I could go on. But I also remember how Leona Helmsley’s last wishes raised eyebrows a few years back.

Philanthropy, like anything else, needs a game plan.

Perhaps the government should increase the tax advantages of giving to target areas like education, alternative energy or that new bridge I mentioned earlier. The tax incentives would encourage money to flow where we need it the most.

Or perhaps it would be simpler for the US government to campaign for its share of philanthropic contributions. Click here to reduce the US government debt.

What do you think?

Norb Vonnegut

I'm here editing The Gods of Greenwich and thinking about 2008, which is the year my story takes place. So in the current theme of light summer reading on Acrimoney, here is a snippet from Chapter Thirty-Five. The paragraph is based on something that really happened the day Lehman Brothers failed, September 15, 2008.

Early in the morning an unattended computer at KfW Bankengruppe wired out 300 million Euros. It expected 426 million dollars in return, a routine “foreign exchange swap.” The German bank soon discovered, however, that it had flushed the money down a toilet of bankruptcy litigation. Or driven 2,130 Ferraris off a cliff. Or taken a wrecking ball to Padres stadium in San Diego.

I have no idea whether KfW recouped any money from Lehman Brothers. But with the image of a wrecking ball in mind, I think you will enjoy the following video. The first ten seconds are critical.

Norb Vonnegut

There's plenty to discuss from the headlines these days. But this summer I've been buried with edits to my next novel, The Gods of Greenwich. And I'm staring at a few deadlines now. With this post, however, I'd like to take you back to the summer of 2007. It was a time before Bernie Madoff confessed, before AIG lost $99 billion in one year and before staffers wrote 1,500 pages of financial reform. Now two members of Congress occupy our attention, elected officials who sit in judgment even with their hands in the cookie jar (allegedly).

Like I said. We're going back three years to the summer of 2007. Here's the first chapter of Top Producer, which will be out in paperback on December 28. If you stop back tomorrow or Thursday, I'll post Chapter Two.

Top Producer

Chapter One

Six weeks ago I was a rising star at a white-shoe investment bank and brokerage firm. I was Babe Ruth on my way from Boston to New York City, John F. Kennedy connecting with crowds during the presidential elections. The markets were rocking during the first half of 2007. And it seemed clear that one day I would become a titan of finance, a fixture on the business pages of The New York Times.

My job is the occupation formerly known as “stockbroker.” But it has been years since anyone called me that. Stockbroker sounds oily. Glengarry Glen Ross. The word makes clients twitch.Even brokerage houses, institutions that profit from legions of smiling, dialing, cold-calling robotrons, cast about for less unctuous titles. Stockbrokers are “investment professionals” over at Goldman. Morgan Stanley can’t decide whether its people are “investment representatives” or “financial advisers.” Another competitor is toying with “private bankers.” After eight years in the industry, I have grown numb to all the angst.

I focus on a different name. Wall Street calls its most successful salespeople “top producers.” Think of us as rainmakers, the folks who butter the bread. We are a brash bunch at the office. We have opinions about everything and say what we want, for we understand three axioms about our industry. 

One:  Investors hire advisers with strong points of view. The more impassioned our convictions, the better. 

Two:  As long as we generate revenues, bosses tolerate our quirks and leave us the hell alone. 

Three:  Wall Street firms pay ridiculous money to top producers. And that, my friend, is a beautiful thing if you’ve ever been poor.

I was a top producer, the captain of a cramped cubicle rigged with a 21-inch, flat-screen monitor and an even bigger television hanging from the ceiling. Around my desk the stacks of investment research often crested five feet before toppling like dominos into nearby aisles.

Who needs space to make money?

I managed ideas, not clutter. My job was to cut through all the market chaos and sniff out the truth. Wall Street coughs up so much investment phlegm. If I wasn’t on the phone guarding clients, “my guys” to use the industry vernacular, I wasn’t making money. Bold, opinionated, you bet.  I had all the answers and then some.

On hedge funds:  “Would you let someone play Vegas with your money and give them twenty percent of the winnings?”

On McKinsey’s alumni, the ex-consultants infiltrating the ranks of Wall Street’s management:  “Fucking revenge of the nerds.  One day, those people will suck our industry dry of testosterone and everything good.”

On money management:  “Wall Street is the only place in the world where thirty seconds swing ten million dollars into place. Try buying real estate for the same amount and you’ll grow old as lawyers negotiate the fine points.”

Finance was fast.  It was furious. And I thrived on the frenzied pace. I had broken into the big leagues of capitalism and brought my “A” game to the office every day. So I thought. The last six weeks changed everything. My world unraveled the night Charlie Kelemen hosted his wife's birthday bash in the New England Aquarium. Best friend, savior, a man who wore Brioni suits the way sweet Italian sausages split their fatty innards over open flames—that was Charlie Kelemen. He did so much for me. He did so much for all his friends. I still can’t believe what Charlie did to us.

The signs were all there. We should have seen it coming.