Ezra Klein, writing for Newsweek nails what’s wrong with Wall Street.
The problem for Tourre—and for Wall Street more broadly—is that they’re so intent on proving that what they did was legal that they can’t see that what they did was wrong. These are men (and they usually are men) of the market, and they played by the market’s rules. And the market’s rules are these: you make as much money as you can without actually going to jail. This is a world in which people are applauded for “blowing up the customer”—that is to say, offloading a crap product on a dim investor.
Once upon a time, the financial services industry existed to perform an essential social good: they provided capitol that businesses large and small required to run their operations, expand and to build stuff. They charged interest on that capitol to hedge against non-payment and to provide income to the banks. And to the extent that those businesses paid back that capitol (almost always), the owners and investors of the financial services businesses thrived. Long before the invention of deriviatives and hedge funds, working for a large investment bank was a ticket to if not filthy lucre, at least to a very well-off life.
At some point this all changed. And the point of the exercise became to make money for the sake of making money. How much money wasn’t even the point. As many wealthy individuals have said over the years, after the first few million the money doesn’t matter any more, its just a way of keeping score.
If anything has been rather well proved by the last few years it is the lie that the financial services industry should not be excessively regulated because it is the essential engine of economic growth.
The financial services industry worked just fine at “being the engine of economic growth,” for the nation in the sixty-six years between the enactment of the Glass-Stegall Act in 1933 and its repeal in 1999. Any argument that returning to such a strict regulatory regime would somehow strangle the American ecnomy is, quire frankly, bullshit.
