Dark Pools

Narratives of financial complexity obscure how capitalist realisms are made—and might be unmade

I own a map that has been displayed, variously, in my living room, beside my writing chair, and above my bed, where it still hangs today. The map depicts the global shadow-banking system—the blanket term covering any unregulated activity that creates credit—and is all boxes: 350 tiny rectangles representing different financial institutions and instruments sorted into pairs, color-coded with combinations of 15 bright stripes for various forms of credit. For every self-evident label, there are four that aren’t, and if an inquiring layperson managed to work their way through the map looking up every foreign term they hit (MTN: medium-term note) there is still the problem of fitting it all into the larger spatial scheme of big (also) color-coded blocks, bracketing marginalia, and solid and dashed lines tracking whatever sort of relationships they track. I’ve never tried.

The map was published by the Federal Reserve following the 2008 crash, and though the image was made publicly available, it is intended for experts. Some mainstream-media outlets paid attention anyway; the Wall Street Journal, in one such instance, published a blog post titled “A Map of Our Ridiculously Convoluted ‘Shadow Banking’ System.” “Oh,” the post deadpans for an opener, “So that’s why our financial system almost collapsed.”

The post goes on to attempt a partial explanation, but that first line is telling. It has the ring of a familiar joke, one that practically writes itself. For literary critic Leigh Claire La Berge, it’s part of the abstraction side of popular financial-media discourse that tends to unfold through the twin poles of scandals and abstractions. In her book of the same name, La Berge argues that during the 1980s, finance became the discursive metonym for the economy at large, and a rhetoric of abstract complexity became a favorite method for talking about finance. “Is capital, or life, more abstract than it was 30 years ago?” she asks. In some ways, it doesn’t matter. The rhetoric precludes the question: “Abstraction, by its very nature, isn’t quantifiable.”

La Berge argues further that finance is uniquely constructed by its popular representations—through the whole array of ways finance gets seen, from market analysis in the Wall Street Journal to films like Oliver Stone’s Wall Street to so-you-want-to-be-me CEO autobiographies like Donald Trump’s Art of the Deal. “Representation,” she writes, “constitutes the value [finance] is supposedly representing.” Finance isn’t just shaped by narration but requires it for substantiation. This is what La Berge, borrowing from and building on Mark Fisher, calls capitalist realism: the chicken-or-egg manner in which finance capital and new cultural forms help one another emerge.

As that process unfolds, the slippage between the two gets dizzying. Just days before Black Monday in 1987, for example—at the time the largest single-day stock market drop in Dow Jones history and soon after a central symbol of the new era of finance—Tom Wolfe’s Bonfire of the Vanities was released; just days after Black Monday, La Berge notes, major papers looked to the novel to lend narrative to the crash. That year the Wall Street Journal touted the growing market for books on finance, and Wolfe cashed in with magazine thinkpieces calling for a realism that could capture the newly complex world of finance. Wolfe considered himself the vanguard of this realism. He had, after all, written Bonfire with the help of informants at Salomon Brothers, a top ’80s investment bank. Meanwhile, the press filtered evolving new realisms through the masculinist language of killers, cannibals, and predators that traders were proudly using to describe themselves, and the incoherent stream-of-consciousness style and bland name-dropping of CEO-penned books simultaneously explained and obscured what, precisely, constituted an insider’s experience of Wall Street.

For all the developing talk of an unfathomable Wall Street, though, financialization was from the start intimately embedded in ground-level economic experience. La Berge points in particular to the way it was enabled by the advent of personal banking. After the gold standard was lifted, the resulting flood of currency presented financiers with a problem: where to go with all of it. When other strategies proved not lucrative enough, they turned to personal banking, pushing consumer bank and credit cards and the development of new types of savings, checking, and retirement accounts. “Third world loans weren’t going to take [the bank] where [its leadership] wanted it to go, nor would commercial lending,” La Berge quotes the business journalist Joseph Nocera, “only the consumer could take [it] there.”

One of the central images that attended this turn, according to La Berge, was the ATM. As they were rolled out around New York, the machines showed up in a series of news stories, most of which reported on the various ways they confused or worried people. In the words of one bank manager, “people are wondering where the bank is.” There’s a not-often-mentioned ATM at the center of White Noise that just might be the proxy-narrator for the entire book. And a whole host of them populate American Psycho, drawing the historical connection elided in other texts—the direct one between high finance and personal banking—with a calculus that was pretty simple to grasp. The trader Patrick Bateman visits them obsessively, often for money he doesn’t need, an activity he likes to follow by randomly killing someone.


I met Cassie Thornton after getting recruited into an art project of hers, a piece in banks called Physical Audit. Physical audits were a series of financial experiments conducted at banks around New York. In one, auditors ran fingers and hands over bank surfaces searching for dirt; in another, people moved as one body while carrying out ATM transactions; in others, people pet a dog named Truman and then the walls, faked blindness while being introduced to the space à la Helen Keller, and opened accounts with as many names on them as possible. Whatever the outward metaphoric resonances, the inquiry was most interestingly about feeling bodily discipline—how our bodies did and didn’t comfortably move, what our eyes did and didn’t habitually see.

The piece was also, intentionally or not, about very particular kinds of bodies. Not everyone could have run such a Physical Audit, or at least not to the same effect. As a group, we were more white than not, middle class-ish, almost all young, all able-bodied. Most of us looked like “artists.” We were just the right sort of visible to be left alone in banks to play.

In her book Debt to Society, cultural theorist Miranda Joseph writes about the ways people are constructed through accounting practices, broadly understood—not just literal banking but related machinations in criminal law, popular discourses about responsibility and trustworthiness, and ways of valuing knowledge. It follows that people are constructed differentially through accounting practices, according to race and class and gender and geography and family structures. Blackness is a central referent, and Joseph spends a chunk of the book surveying the ways it has been historically constituted in especially close concert with narratives of indebtedness, untrustworthiness, and, crucial to the era of financialization, irresponsibility. She says gendered norms matter, too; specters of the shopaholic and the nervous, tight-fisted saver serve as negative frames for correct credit behavior. If personal banking is a key place high finance makes itself seen in everyday life, it is also an object that must itself be teased out, its systems of suppositions, points of access, and manifestations in specific bodies brought into focus. To that end, Joseph calls for counter-accounting practices that pay attention to the nuance of people’s different lived realities of finance.

But how that work should look isn’t necessarily obvious. I got the chance to interview Joseph and, while speaking off-handedly about student debt, complained about 18-year-olds getting stuck with loans they didn’t fully understand. She pointed out how that logic could be extended—to people of certain races, in “bad” neighborhoods, at nursing homes and assumed doddering—and mentioned a whole body of scholarship that documents the ways people understand the risks of taking on “predatory” credit (here the traders’ rhetoric survives) far better than they’re often said to. “We should be careful about buying too completely into the idea that all we need is financial education,” she said. And not just because doing so can get condescending fast, but because it erases what people already know about how finance makes their lives. The counter-accounting trick, it would seem, is to both be critical about what needs to be known and maximize what already is.

Michael Lewis’s Flash Boys might appear a strange place to draw inspiration. Lewis is a prime purveyor of the popular explainer-of-finance genre, and Flash Boys, which reports on exploitative high-frequency-trading practices, inevitably mines the rhetorical status quo that precedes it. Yet there are useful cracks to that facade. If at times the book presents finance as incomprehensible, it also presents it as opaque, and the two tend to be linked, if only implicitly. The opacity is a relational one. A quant doesn’t know what his algorithm does in the world because his department is purposely isolated from others in the firm. Mutual-fund managers find stock prices rising mid-trade because hidden advantages are doled out to high-frequency traders. Big investment banks open unregulated private exchanges called dark pools not (as the official logic goes) to protect clients but to protect their own profits from more agile HFT competitors and gain, as a bonus, a screen from behind which to better fleece clients. On the whole, the financial world depicted in Flash Boys seems impenetrable less because it is fundamentally too complex to grasp than because it is so systematically full of obfuscations.

Secretive financial wrongdoing has long been a theme in popular representations of finance, to be sure. But, as La Berge argues, it’s often narrated in the language of criminality—the scandal side of scandals and abstractions—which ultimately frames exploitative behavior as the violent exception to a system left otherwise unexamined. Flash Boys isn’t overly interested in fingering particular culprits, and, in a book practically destined to bestsellerhood, that disinterest proved ­anxiety-producing in financial quarters.

Consider a CNBC interview on the day of its release between Lewis, a Flash Boys informant and trader named Brad Katsuyama, and William O’Brien, the then-president of a private exchange called BATS that was implicated in some of the book’s worst allegations. The interviewers spent substantial energy trying to establish whether Lewis and Katsuyama thought the stock market was “rigged,” and O’Brien seemed fixated on dispelling the systemic implications of that notion. “Shame on you both for falsely accusing literally thousands of workers,” he blustered at the start of the interview, and only grew more aggressive from there. The interview soon went viral, as did Flash Boys as an explanatory touchstone. In one incestuously ­capitalist-realist strand of that process, news outlets from Bloomberg to CNN mentioned the book in reports on an investigation into HFT firms by New York attorney general Eric Schneiderman, who himself characterized the effort as an attempt to understand and regulate “Insider Trading 2.0,” a concept he introduced with reference to Oliver Stone’s Wall Street. Insider Trading 2.0 “isn’t about some Gordon Gekko–like characters gobbling up companies using information about those companies that no one else has,” he said. “In some ways, it’s more insidious.”   

The Wall Street truism on HFT is that it provides markets with necessary liquidity; Flash Boys tells the story of a group of financial workers trying to produce a counter-account to that line. Katsuyama, whose inquiry into HFT drives the book, began to ask questions when he started seeing his stock prices rise mid-trade every time he tried to execute a big order as a trading manager at the Royal Bank of Canada. When no one could explain it to him, he convinced his bosses to earmark $10,000 a day to lose testing hypotheses about what was going on. He assembled a team of people with complementary expertise—hard- and software, electronic trading ­strategy—and began conducting experiments, most of which bombed, because the guesses about the market on which they were based were wrong.

There’s no simple escape hatch from the ways we’re financialized, Joseph argues. For her, the task is not to find new and perfect modes of accounting but to rework available ones toward more just ends. Flash Boys says little about how the exploitative practices it details affect people in their daily lives, and its prescription for curbing those practices is likewise vague. That doesn’t mean the book doesn’t contain tools for someone else to raid. After Physical Audit was done, Cassie made a short video with some footage she’d taken. The video consists entirely of shots of participants’ auditing hands set to pulsing Muzak. It is all repetitive action, closeups of bank surfaces, and looping insinuations of deep affect and desire. It looks like the beginnings of a data set. That data doesn’t represent everyone’s capitalist realism, but it represents Cassie’s, and mine, and if that distinction can be preserved, her project suggests ways to explore how people iterate and are iterated by finance. For those without $10,000 a day to spare, the methodology might begin with the body—by watching its position, working to feel how finance invisibly guides its hand.


There is likely something to be made of the fact that both shadow banking and dark pools are industry-accepted terms; I haven’t fully sussed it out but would guess it had to do with a counter-account financial institutions could call on in response to growing calls for transparency. Don’t worry, it’s probably already reassuring us, opacity is an important part of a healthy market system.

In late 2014, Fortune reported that the Federal Reserve was updating their map. This one comes as an estimate puts shadow banking at 80 percent of the U.S. banking sector (as compared to 20 percent globally) and will attempt to record every major institution in the U.S. shadow banking system. “It is the most complicated map you have ever seen,” said Stanley Fischer, the Fed’s vice chairman. Maybe. For most people there’s also the question of being able to draw its counter-map: that of the shadow banked. 

correction/December 30, 2017: The demographic gloss of the Physical Auditors is misleading; it erases a number of heterogeneities across the group.