Wall Street’s back to business as usual
TEXT OF COMMENTARY
TESS VIGELAND: Wall Street marked the one year anniversary this week of the collapse of Lehman Brothers. The one that started it all. President Barack Obama used the occasion to call — again — for regulatory reform.
Our economics editor Chris Farrell is all for it. But he wonders how much the Street can really change, without major follow through from Washington.
Chris Farrell: I happened to be in New York the same week as President Obama. And while walking around the canyons of Wall Street, I ended up at the corner of Wall and Broad.
It’s a remarkable physical symbol of both American capitalism and American democracy: On one side you have the New York Stock Exchange; across the street, the Federal Building where George Washington took the oath of office as the first President of the United States. It’s a fitting platform for the President’s talk.
When I asked a long-time friend, who’s covered the economy for years what he thought about Obama’s idea that Wall Street needed to change, he laughed.
“Look, Wall Street is as busy as ever making money,” he said. “That’s what Wall Street does.”
He’s right. Sure, business has been down over the past year. The regulators have tightened their grip. But Wall Street is on the same rebound as the economy.
It’s been several years since I’ve walked in lower Manhattan. It struck me that some investment banks I used to follow are gone, but other banks have moved in. There are condominiums now, even a BMW dealership. I love the energy.
But here’s the thing: Wall Street is unique in American society. It truly thrives on change and turmoil. At least that’s according to Richard Sylla, an economic historian at New York University.
“They’re trying to predict where the world is going,” he told me recently. “And the people who can get in on the ground floor will make a fortune.”
Alec Young, an equity strategist at S&P, echoed Sylla, arguing that despite all the trauma of the past year the Wall Street fundamentals haven’t changed.
It’s a place where a lot of driven people get together looking to innovate and to see the next money-making opportunity.
“That’s the core of Wall Street,” he says. “It’s why I love it.”
Me too. But the relentless drive for money and profit is also why Washington can’t stumble with major regulatory reform.
We can’t have another round of Wall Street bailouts when the next boom goes bust. And Wall Street needs to know that. Otherwise, traders will decide with time that the path to riches is to make as many heads-I-win and tails-the-taxpayer-loses bets as possible.
It’s in the nature of the beast.
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