Wall Street: Is It Good to Apologize for Greed?

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A critical lesson lies in the history that runs from Morgan to Goldman. Yes, the economic role of the financial sector is to gather capital and fund profitable ideas and enterprise. But the real business of Wall Street is to make money—lots of money, as much as possible. In his financial memoir The Mind of Wall Street, legendary investor Leon Levy tells of a dinner party he attended after the stock market crash of '87. The group asked his opinion, and he replied by telling them about one of his favorite plays, The Tiger at the Gates by Jean Giraudoux. It's about a debate between Ulysses and Hector about the possibility of averting war. Yes, war is terrible, it becomes clear. Everything should be done to avoid it. But the play's closing lines bring word that "the Trojan War has begun."

Writes Levy: "The play's message for me is that some events are inevitable."

betting high stakes on the future

Well, it's inevitable that Wall Street will pursue money with an unusual passion. It's a place where driven people gather to innovate, to find the next money-making opportunity in stocks, bonds, and other assets, always trying to outthink the next person. Wall Street is also unique in American society, maybe even in the global economy. Most parts of society, from chief executives to nonprofit managers, give lip service to change. Only Wall Street truly thrives on change, turmoil, and upheaval.

"They're trying to predict where the world is going," says Richard Sylla, an economic historian at New York University. "The people who can get in on the ground floor will make a fortune."

The ways that Wall Street deals with the occupants of the other floors—for instance, the ordinary folks who wonder when the benefits from the massive government intervention in the economy will flow to them—have obviously changed since the heyday of the Morgans and Harrimans. The relentless drive for money hasn't. And that's why Washington can't stumble with major regulatory reform. Wall Street traders learned during the credit crunch that the path to true riches lies in making as many "heads-I-win, tails-the-taxpayer loses" bets as possible. It's in their DNA.

The lesson for everyone else is simple: The more Wall Street puts the financial system at risk, the more it needs to be tightly controlled. Proper oversight now will eliminate the need for apologies later.

Farrell is contributing economics editor for BusinessWeek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace. His Sound Money column appears on BusinessWeek.com.

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