Three developments in finance cropped up in the last days that must be read as a single story.
First, Blankfein, Dimon, and the rest of the Wall Street bigwigs visited the White House to meet with the president and his team. That team consisted of Denis McDonough (Chief of Staff); Valerie Jarrett (Senior Adviser); Cecilia Munoz (Domestic Policy Adviser); Gene Sperling (National Economic Council Director); and Alan Krueger, (Chairman, Council of Economic Advisers). The meeting was secret, but we can deduce much from its attendance.
How did we get here? This is the question occupying “occupiers,” as they call themselves, at their first post-Sandy community-wide meeting. On this cold November night just before Thanksgiving, “here” is the St. Jacobi Lutheran church in Sunset Park, Brooklyn, where at least 300 Occupy Sandy volunteers have crammed into the pews. But “here” is also the uneasy juncture of political protest and disaster relief where this newly formed organization finds itself.
Brad DeLong looks at the degree to which Wall Street has bounced back from the collapse under Obama, and wonders why bankers have turned completely against the president:
Why? It is not as though Wall Street has done badly under Obama. Stock prices are up and interest rates are down, so leveraged financial institutions long assets–as Wall Street inevitably is–have done very, very well indeed. The standard bargain that the Democrats offer Wall Street has held. It is:
Former Goldman Sachs employee Greg Smith wrote an op-ed in yesterday’s New York Times that simmers with pathos. Smith describes the devolution of the culture at Goldman: Whereas in the past, the company worked in the interests of its clients, they are now seen merely as the source of transactional profit, to be manipulated for the benefit of the firm. His story emerges in the midst of a huge effort by Wall Street to eviscerate and delay the implementation of the Volcker Rule, which limits bank traders to running a client-service businesses by prohibiting trading for the bank’s own account.
Wall Steet visitors take pictures with the Charging Bull statue, which author Diane Durantedescribed as symbolizing the "energy, strength, and unpredictability of the stock market." A plunge in the stock market yesterday appears to have been caused by a typo.
It shouldn't surprise anyone that the reaction from the Tea Partiers to financial regulation legislation has largely been "no comment." The glue of the Tea Party movement is protest against redistributionist government that unfairly taxes the hard-working and then gives handouts to the undeserving. The only relationship in this model is a single powerful institution, government, oppressing free individuals. There is no mention in this model of the other powerful institutions that exist in the private sector, "Wall Street" among them, and thus no concern about how those institutions (other than being the recipients of bailouts) might wield influence over freedom-loving Americans.
At a conference in London, a Goldman Sachs international adviser, Brian Griffiths, praised inequality. As his company was putting aside $16.7 billion for compensation and benefits in the first nine months of 2009 -- up 46 percent from a year earlier -- Griffiths told us not to worry. “We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,” he said.
Tim Fernholzprofiles seven liberal financial experts who are helping transform Wall Street:
The financial crisis has led to an accountability moment for our economic system. But the most disappointing -- if unsurprising -- realization in what ought to be an era of reform is that so few experts from the world of Wall Street and commerce have stepped forward to offer a transformative vision of the new economy. On the left, brilliant economists and advocates abound, but it is harder to find practitioners whose reforms are inspired by hard-won experience.