Wednesday, April 21, 2010
Wall Street: A Standard of Conduct?
Perhaps we will have new financial regulation. Perhaps the weight of public opinion is being felt by the Republicans in the Senate. My Republican Senator from Ohio, George Voinovich, who will retire soon, should jump at the opportunity to do something meaningful before he steps down from his career of public service. He was the Governor of Ohio when I arrived in Columbus, Ohio in July, 1996 to begin my tenure at the Ohio Bureau of Workers' Compensation. He was the man-in-charge of Ohio when the OBWC funded some 86 investment managers in 1997-98 that included the politically well connected coin dealer Tom Noe. Unfortunately for all, the Coin Funds that were funded during the Voinovich and Taft administrations should never have been funded in the first place. But, here again we see that raising money for political campaigns can lead to rewarding those that raise the money with opportunities to destroy the trust people have in their government. While the remaining 85 investment managers behaved in a responsible manner, it took only one bad apple to spoil the opportunity for so many.
The idea that Wall Street can run without the necessary regulations, or the Securities & Exchange Commission (SEC) can operate with no teeth and luke warm enforcement, is pure crap. That's right. I said pure crap, and I mean it too. Even with a new set of regulations to govern the way business is done on Wall Street, the idea that the markets will regulate themselves is also pure crap. The idea that certain people are clients of Wall Street is also pure crap. When things get tough and survival becomes upper most in the minds of those that run the biggest banks, there are only marks at the table. Everyone is a mark because everyone is looking out for his own survival. As I have written many times, economics is easy, politics is hard, and enforcing a standard of conduct may be the hardest thing to do, but that is no reason why we should not attempt to do so.