cheerful capitalism

Cheer Up, Wall Street! A Self-Esteem Intervention for Victimized Bankers

Protesters block off Wall Street Photo: Julie Dermansky/Corbis

It’s a little hard to look at Wall Street without cringing these days. The nation’s richest financiers have been moping around midtown east like Eeyore, despondent about their stock prices, their return-on-equity figures, and the fact that the president won’t read their grandkids’ poetry manuscripts. You almost want to walk right over to the Grill Room at The Four Seasons and give out a round of sno-cones and bear hugs. How are we supposed to function as a free-enterprise-worshiping society if all our millionaires and billionaires are holed up in their offices, listening to the xx with the blinds drawn and stress-drinking Petrus ‘82?

We would like to present the wizards of Wall Street with five reminders of just how good they have it, in the hopes of restoring their battered self-esteem and stopping them from acting like whiny losers. (Remember? That’s the 47 percent’s job!) It’s unbecoming for the Masters of the Universe to behave like, as Chrystia Freeland put it, a “vilified underclass.” So snap out of it, lift those chins, and consider:

1. You’re winning the regulation game.
The conventional wisdom among financial types is that regulation is an ever-advancing menace that was sent by the Obama administration, in the form of the Dodd-Frank Act and other related rule-making efforts, to kill profit margins and steal all the fun out of our capital markets.

But if you actually look at the impact of the new regulations, it’s clear that Wall Street is still calling the shots. Almost every major regulatory push in the post-crisis era — from limiting commodity speculation to giving bank shareholders a say on executive pay — has encountered fat-walleted opposition from the industry. The result? Many rules have been tweaked in Wall Street’s favor, and some have gotten struck down altogether.

The Volcker Rule, the bête noire of high-risk proprietary traders everywhere, has been lobbied against by a who’s who of Washington. Even the Federal Reserve has, reportedly, been questioning whether the rule would be “too burdensome for Wall Street.” When you’ve got your central bank making your argument for you, it’s time to turn that frown upside down.

2. You’re still making bank.
Yes, there have been layoffs at financial firms. Lots of them. And yes, nobody’s making as much as they did in ‘06. But for the bankers who remain employed, life is pretty good. Bonuses are recovering from their post-crisis lows, according to industry compensation guru Alan Johnson, and rising share prices are making those stock options you got in ‘09 and ‘10 look mighty attractive. Lots of financiers are still paying sub-20-percent tax rates, and it’s even possible to receive a bonus if you preside over a struggling bank and take a giant writedown on a major asset! Long story short, you don’t have to be buying apartments in 740 Park to realize that the worst is probably over. 

3. The Fed is making your job easy.
When Fed chairman Ben Bernanke announced QE3 last month, many Wall Streeters were beside themselves with joy. Stocks soared, animated GIFs were passed around trading floors, and for a moment, the sun was shining.

These revelers knew what many on Main Street don’t: that programs like QE3, while nominally constructed to alleviate unemployment and encourage spending among the masses, almost always buoy Wall Street as well. As the Financial Times reported on Monday, QE3 has already widened mortgage spreads, allowing banks to issue mortgages at a lower cost (and with a bigger profit margin, thanks to that whole not-passing-savings-to-clients thing). It also encouraged more refinancings, guaranteed rock-bottom interest rates for years, and gave bank stocks the kick in the pants they needed.

4. No matter who wins the election, you’ll be fine.
Listen. I know Mitt’s your boy. But really, did you hear him talking about the “big kiss” Obama had given to “New York banks” in the debate last night? Did he sound like he’s going to keep being the the financial industry’s best friend if he moves into 1600 Pennsylvania?

The truth is, neither a Romney administration nor an Obama second term would give you and your ilk everything you want. But it’s also true that neither will cramp your style too badly. Markets have historically performed better under Democratic administrations than Republican ones, and Obama’s administration has overseen some of the largest single-term gains of any president since 1900. Despite the rhetoric, the Obama administration’s track record on prosecuting Wall Street wrongdoing has been more likely to result in dropped charges than jury trials. And try as he might, Obama isn’t likely to be able to close the carried interest tax loophole for hedge-fund managers and private-equity kingpins.

One of those kingpins, the Blackstone Group’s Steve Schwarzman, even suggested this week that all of the left’s attacks on Bain Capital during the election cycle had strengthened the private equity industry, not hurt it. Hear that, fellas? You’re invincible!

5. Three words: “Silicon Valley Start-ups.”
Trust us: After this Bravo reality show about the crazy, obnoxious lives of Silicon Valley rich kids premieres next month, everyone who used to rail against banks will (or should, anyway) turn their red-hot antipathy westward. The weekly parade of a bunch of entitled start-up founders and VCs will be the best thing to happen to Wall Street’s image in years. And if you’re lucky, America will only have the energy to hate one industry at a time.

So pull yourself together, financiers, and trust that things aren’t so bad. Because you’re rich enough, you’re smart enough, and doggone it, (a few) people (sort of) like you.

Cheer Up, Wall Street!