Oh please. Spare me the stories about how misunderstood the "just following orders" crowd is on Wall Street. Everyone made damned good money playing the game and while they still can look at their bank accounts, flush with bonuses - the sixth largest in history - the other side of the great swindle are those who bought into the credit scheme. A certain amount of blame can be passed around to everyone including the politicians who worked closely with Wall Street to allow this as well as the greedy who sought easy cash to flip real estate but let's not kid ourselves. Wall Street profited enormously and few others have come out as comfortably as them.
Financiers tell their not-for-attribution account of the mortgage crisis like this: Americans undersaved and overspent for decades, relying on rising property values to bankroll their lifestyles. But nobody on Wall Street forced United States homeowners to take out loans on houses they couldn’t afford, or refinance mortgages to spend money on cars they shouldn’t have bought.If only we saw those bosses going to jail or even threatened with jail. If only...
The esoteric securities underneath the current mess are, to the people who invented and marketed them, analogous to pharmaceutical drugs. Used correctly, they can enhance your life. Abused, they are lethal.
Of course, mistakes were made on Wall Street, says Emanuel Pleitez, a 26-year-old former Goldman Sachs employee who resigned from his job a few months ago to run for Congress in his hometown, Los Angeles. But to a great extent, he says, those mistakes were born of misplaced trust.
“Look, you can talk about collateralized debt obligations all day long,” he said, referring to a type of asset-backed security that has turned famously toxic. “But there were ratings agencies that were supposed to tell us how risky these securities were. We essentially closed our eyes and said, ‘O.K., you say this is rated triple-A, fine, I believe you.’ ” In hindsight, he said, “Everyone should have been more skeptical.”
You hear a lot about the failure of regulators, too. But it’s difficult to find anyone in the financial trenches who thinks the problem is Wall Street itself. Difficult, but not impossible.
“People say ‘Well, the Fed is to blame because there was all this loose money,’ ” said Luis E. Rinaldini, a former partner at the investment banking firm Lazard Frères, now at the merchant bank Groton Partners. “But guys who run banks are paid to be cautious when there’s loose money around.”
“I mean, if you had a bus driver who went 100 miles an hour on an icy road, you’d think he was crazy,” he adds. “But if his boss said, ‘It’s our policy to drive faster as the roads get icier,’ you wouldn’t be surprised if the boss ended up in jail.”
