Saving the Street From Itself
If Greg Smith believes what he’s experienced is something new, he doesn’t know history. In 1928, Goldman Sachs and Company created the Goldman Sachs Trading Corporation, which promptly went on a speculative binge, luring innocent investors along the way. In the Great Crash of 1929, Goldman’s investors lost their shirts but Goldman kept its hefty fees.
If Smith believe such disregard of investors is unique to Goldman, he doesn’t know the rest of Wall Street. In the late 1920s, National City Bank, which eventually would become Citigroup, repackaged bad Latin American debt as new securities which it then sold to investors no less gullible than Goldman Sachs’s. After the Great Crash, National City’s top executives helped themselves to the bank’s remaining assets as interest-free loans while their investors and depositors were left with pieces of paper worth a tiny fraction of what they paid for them.
The problem isn’t excessive greed. If you took the greed out of Wall Street all you’d have left is pavement. The problem … http://www.nytimes.com/roomfordebate/2012/03/15/does-morality-have-a-place-on-wall-street/saving-the-street-from-itself
Robert Reich, the former Secretary of Labor, is Chancellor’s Professor of Public Policy at the University of California at Berkeley ©2012 ALL RIGHTS RESERVED THE AUTHOR(S) AND THE PUBLISHER