Wall Street’s Still-Warped Incentives

[groovedaddy]

Once in a while, the written word touches a raw nerve.

Such was the case, it seems, with my July 7 column, “Let Goldman Be Goldman,” which took to task both the Obama administration and the Democratic-controlled Congress for “demonizing” Goldman Sachs, and much of the rest of Wall Street, in order to pass the Dodd-Frank financial reform law.

In the more than 200 responses to the piece, there was an interesting patois of expected vitriol — many Americans seem to know no bounds in their hatred of Goldman (and of those who dare defend it, even partially) and the Wall Street greed, arrogance and indifference the firm symbolizes for them — and a zen-like plea for reform.

One Salt Lake City reader (after paraphrasing a 2008 interview with writer Margaret Atwood where she purportedly said something to the effect of “Once we stop believing in something, it disappears”) predicted that if we “stop believing” in the “institutionism” of the banks, they will “cease being the paragon they have programmed us to believe they are and we can get on with the business of creating something more efficient, effective and empathetic.”

Given that Wall Street has become little more than an elaborate confidence game and that, according to F.C.I.C. chairman Philip Angelides, the nation’s 10 largest banks have increased their share of banking assets to 55 percent from 25 percent between 1990 and 2005, this reader could well be on to something.

http://opinionator.blogs.nytimes.com/2010/09/02/wall-streets-still-warped-incentives/?th&emc=th

[Hawkowl]

1. If everyone transferred their deposits form B of A

Or even 25% of all depositors in Bank of America, Chase, and Citibank transferred their deposits into local community banks and credit unions, the depression would probably end within a year. Why? These small banks are still lending money to credit worthy people and businesses. They don't have to hide multi billion dollar losses.

[groovedaddy]

3. I advocated for that (and use of the Small Business Administration) instead of the bailout.

Something had to be done. Letting those "too big to fail" institutions fail may have served as the catalyst for REAL reform. The question remains: what could smaller institutions and the SBA with even a 10th of the bailout money and how would it have impacted the economy. As it stands now, NO ONE trusts the bastards at the "too big to fail" institutions, and rightly so.

[Turbineguy]

2. More and more Americans

are connecting Wall street financial predators' profits with losses to pension funds and foreclosures and homelessness of the rest of us.