TEXT OF INTERVIEW
KAI RYSSDAL: Todd Buchholz was talking about tapping into the wisdom of the past 100 years a minute ago. I’d say just this past one year has been plenty, thanks all the same.
We’re going to spend some time this week and next looking back at the year that was. And it seems to make sense to start where all the trouble began — on Wall Street.
We’ve got our New York Bureau Chief Amy Scott on the line to do just that. Hey, Amy.
AMY SCOTT: Hey, Kai.
RYSSDAL: All right, so listen. We’ve been doing this story for what — a year-and-a-half now, right?
SCOTT: That’s about right, yes.
RYSSDAL: All right. But I need you to give me the 30-second reminder of how we got to where we are in the case of Wall Street.
SCOTT: Well, just speaking of securities firms, we can talk about Bear Stearns back in March running into some serious trouble because of its investments in the subprime mortgage market. JP Morgan Chase ended up coming to the rescue by buying Bear Stearns. It was a huge deal, the demise of one of the Big Five independent investment banks. But then September rolled around. Lehman Brothers found itself in a similar position. This time there was no rescue. The firm filed for bankruptcy. And that was a real turning point. Merrill Lynch arranged to be bought by Bank of America. And then, of course, Goldman Sachs and Morgan Stanley laid the groundwork to become more heavily regulated commercial banks in exchange for some federal help. And then, of course, to cap it all off, one of Wall Street’s own, former Nasdaq Chairman Bernard Madoff confessed to pullling off perhaps the biggest Ponzi scheme ever. So, it’s been quite a year on Wall Street.
RYSSDAL: Let me pick up on a word you used a minute ago — demise. There was a lot of talk as all this was happening that Wall Street, you know, as we knew it, was dead. What’s your take on that?
SCOTT: Well, I would say, based on the people I’ve talked to, it’s not dead but certainly humbled quite a bit. Most of the people I’ve been talking with over the past few months believe that Wall Street will survive. One person said, “It’s going through a tunnel. It’ll be dark in there for a while. But it will come back out eventually.” And it’ll look quite different. The big firms will be more regulated, probably more cautious — at least for a while. But people say that the innovation and the risk-taking that really defined Wall Street will still go on but at smaller firms and at hedge funds — at least the ones that survive.
RYSSDAL: So, has there been any real change, then, in the culture. I mean, are these folks still trying to be, you know, the masters of the universe?
SCOTT: Well, you know, it kind of feels like the party is over. At least for a while. Of course, thousands of people have lost their jobs. There’s been a lot of criticism that the banks are still paying some sizable bonuses to those who are left. But they’re much smaller. And you’re just not seeing the same kind of money being thrown around. One example, the legendary Manhattan strip club, Scores, is closing down. It was said to be frequented by Wall Street types. Some night clubs have reportedly stopped doing their expensive bottle service. You know, that’s partly because of the general economy in this city, but I think it’s also kind of a sign of the times.
RYSSDAL: We should confess that we’ve tracked you down on vacation. You’re not actually in New York right now. But, obviously, you live there. You spend a lot of time covering Wall Street. How does it feel? Does it feel any different to you?
SCOTT: It does. You know, I would say it’s generally pretty freaked out. The real estate market, the economy in New York are very tied to Wall Street. I recently read that nearly $1 in every $4 employers paid in salaries last year went to people in finance jobs. So people are naturally worried about what all this means for New York. But, you know, I was living in San Francisco after the dot-com bubble popped, and I recall a sense, sort of, of sanity returning to the city. New York, similarly, had become such an inflated place. And many New Yorkers were feeling sort of pushed to the fringes by the excesses and the wealth. So I think some people are hoping the city might become a place not just for the wealthy again.
RYSSDAL: Marketplace’s Amy Scott, our New York bureau chief. As I said, we tracked her down on vacation. She’s actually in Mexico today. Amy, thanks a lot.
SCOTT: Thank you, Kai.