Just How Big is the Elephant?
The old saw about blind men touching the elephant applies aptly to Wall Street and the culture of blame around who and what caused the financial meltdown. One blind man feels the beast and says it was irresponsible mortgage brokers. Another says it was structured finance, securitization, etc., and derivatives. Yet another accuses regulators of being asleep at the wheel. A feeble voice from the back end of the giant animal even blames Greenspan for his Ayn Randian myopia.
Now Obama wants to reinvent the elephant that is Wall Street. We agree with him. Citibank did not have to get as big and complex as it did. In the days of Walt Wriston, and even John Reed, it was good enough as it was. Sandy Weil destroyed that company. Bank of America ran off the rails for much the same reason. Did it really have to buy Merrill? JPMC seems charmed and credit must go to Jamie Dimon (especially for buying assets like Bear Stearns as cheaply as he did) but we wouldn’t be surprised if that one hits headwinds too in the fullness of time.
There is no rational reason, if one thinks back to what the role of a bank, merchant or commercial, is and should be that one single entity MUST take the huge bets they have over the last decade using depositor’s money on the roulette table of proprietary trading and providing leverage to hedge funds. It can be argued, as it was, that such financial gaming helps provide liquidity in the markets, etc., but ultimately, finally, and dramatically, it failed.
We’re just fine with a smaller Citi or Mother Morgan. We’re just fine with a break up of these large institutions, which will only create more competition which is, after all, what this country is all about, right? We’re also just fine with a consumer protection agency. We don’t like more government but this is an exception.
So, the problem is not, metaphorically, about what part of the elephant the blind man feels. It’s that we’re talking about an elephant. If Wall Street were a cow (even a cash cow) we would all benefit.
