At the end of March, Neil Barofsky, on his final day as the special inspector general of the Troubled Asset Relief Program (TARP), published a scathing indictment of the program over which he’d served as watchdog since its inception in that awful, apocalyptic autumn of 2008. On the op-ed page of the New York Times, Barofsky argued that TARP had “failed to meet some of its most important goals”: protecting home values, easing the foreclosure crisis, alleviating the credit crunch—helping Main Street, in other words. Indeed, only when it came to aiding Wall Street had TARP worked like a charm. “Billions of dollars in taxpayer money allowed institutions that were on the brink of collapse not only to survive but even to flourish,” he wrote. “These banks now enjoy record profits and the seemingly permanent competitive advantage that accompanies being deemed ‘too big to fail.’ ”
Without necessarily intending to, Barofsky’s op-ed provided the perfect coda for the era of bailout rage—a two-and-a-half-year spasm of populist fury that promised, or threatened, to inflict enormous changes on the financial sector. In the political realm, Wall Street faced the prospect of root-and-branch reregulation, up to and including the potential nationalization of the industry’s largest players, and in the cultural realm its transfiguration into a kind of pariah state. Once upon a time, the Street’s leading lights had been glamorized and admired to the point of worship; now the likes of Robert Rubin, Lloyd Blankfein, and Richard Fuld were relentlessly pilloried and demonized. Once the megabanks were seen as indomitable powerhouses and sources of “financial innovation” (whatever the hell that was); now the greatest and most fearsome of them all, Goldman Sachs, was recast—by a famous and infamous Rolling Stone screed—as a “great vampire squid.”
Yet today on Wall Street, all of that seems a very long time ago. Not only are the banks rolling in dough again, but their denizens’ customs and sense of self-esteem have largely reverted to the status quo ante. With the enactment of a financial-reform law that is widely seen as toothless, the peril posed by government intervention has receded, and with it the industry’s concerns about the vicissitudes of public opinion. Vampire squids? That’s so 2009—an eon ago in Wall Street time. We won, you lost, get over it, is the prevailing attitude.
A mixture of indifference to and disdain for the views of outsiders has, of course, always been a feature of Wall Street culture—an inevitable outgrowth of the industry’s profound insularity. “Most bankers haven’t a clue what the rest of the world thinks of them,” says Henry Blodget, the fallen Merrill Lynch analyst now reborn as a bumptious web entrepreneur. “Wall Street is its own world, with its own tribes, its own customs, and its own pay scales, which are otherworldly. Once you’re in that world, what matters most is your place in that world, not what the rest of the world thinks of you. Given their druthers, bankers would not choose to be loathed and ridiculed. But in the hierarchy of priorities, this concern comes at the end of a long list of concerns that starts with this year’s bonus.”
Now, you might think that, given the gargantuan havoc they wreaked on the global economy and the vicious backlash it inspired, the bankers might have engaged in a modicum of self-scrutiny over these past months—and in the process arrived at, if not enlightenment, then at least a mildly less exalted conception of their own value and virtue. But this supposition presumes at once a degree of reflectiveness never much in evidence on Wall Street and a sense of culpability for the crash that was equally unapparent even at its depths.
“This is a profession with a lot of smart people, but who aren’t necessarily terribly introspective,” says one of the city’s most prominent private-equity kingpins. “They think they actually deserve to make all this money. [And] they created for themselves a narrative where the irrational actions by a few people caused the meltdown. None of them were sitting there saying to themselves, ‘I was responsible for this crisis. Shame on me.’ ”
None of which is to say that the bankers were utterly impervious to the loud calls for their decapitation. “The crisis momentarily alerted Wall Streeters to the fact that the rest of world is flabbergasted and appalled by how much money everyone makes,” Blodget says. “This revelation was startling to Wall Street, and with the threat of incarceration [and reregulation] on the table, it led to a temporary focus on relative decorum. But that’s all over now, so Wall Street has cheerfully gone back to doing what it’s great at.”
Beneath this cheerfulness lies a not-inaccurate reading of history. In the past three decades, Wall Street has rapidly (increasingly rapidly) gone through multiple cycles of bubble and bust, each of which has brought with it a period of public castigation, followed by a startlingly quick return to what the industry regards as normalcy. And although the most recent financial crisis was orders of magnitude more devastating than the ones preceding it, Wall Street’s view about the resulting backlash—this too shall pass—never really wavered.
At least when it comes to regulation, that view has certainly been vindicated. Whatever the ultimate effects of the financial-reform measure signed into law last year, there can be no doubt that Wall Street dodged the deadliest bullets that might have come hurtling in its direction: nationalization, a breakup of the megabanks, strict limits on financial leverage. And if Republicans have their way, even the less Draconian new rules now on the books will be repealed; the budget proposal put on the table last week by Representative Paul Ryan pledged to do just that.
And what of the broader cultural opprobrium aimed at Wall Street? All last year, public polling showed that nearly 60 percent of the electorate held a negative view of Wall Street, and that voters blamed the banks and the bankers ahead of either Obama or George W. Bush for the Great Recession. According to a Bloomberg News survey in December, 71 percent of respondents were in favor of banning bonuses for any bank or financial institution that got a federal bailout, and 70 percent thought that Wall Street should be taxed to help bring down the deficit.
There are plenty of signs, however, that the country’s ire toward the financiers is cooling—and if that’s so, it should come as no surprise. America has long been possessed of a deep ambivalence about money and moneymakers, whereby envy, aspiration, and outright greed blend together in a way that tends to dilute the purer forms of populism. And this attenuation is only exacerbated by the great and apparently untreatable malady that is our case of national amnesia. With the stock market having recovered, the Gross National Product growing, and even the desultory jobs outlook slowly starting to improve, it’s no stretch to predict another bout of collective forgetfulness in the offing.
Pinning down an ever-shifting Zeitgeist is an imprecise business, to be sure, but for what it’s worth, consider at least one data point coughed up by the culture machine. In February, please recall the film Inside Job, which offered a brilliantly clear (if at times highly manipulative) picture of the meltdown, snagged the Oscar for Best Documentary Feature. When Charles Ferguson, the movie’s director, took the stage and intoned, “Three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail,” he was greeted with an outburst of applause from the couture-clad pitchfork-wielders in the crowd at the Kodak Theatre.
A few weeks later, though, Relativity Media released a different kind of film: the Bradley Cooper star vehicle Limitless, in which a terminally blocked writer turns to a wonder drug that gives him unlimited mental power. And what exactly does he do once he’s endowed with all that power? He dons a pinstripe suit and becomes a filthy-rich trader, naturally.
The cheap and easy point to make here is that Hollywood is replete with hypocrisy—and, hey, who am I to disagree? But the more telling point is that the Zeitgeist industry now apparently reckons that the public revulsion with Wall Street’s ways has ebbed to the point where such a tale won’t strike a clanging, off-key note. And whaddya know? The industry ain’t wrong: Limitless has grossed more than $80 million worldwide—compared, for the record, with just $6.2 million for Inside Job.
Apples and oranges, you say? Maybe so. But on Wall Street, where money talks and bullshit walks, that box-office disparity could (and in some quarters, no doubt, will) be taken as a sign that soon enough the bankers will be seen as Masters of the Universe again. Depressing? Sure. Let’s hope that they are wrong. But, alas, they’ve been right before, and may well be again.