| Wall Street smiles mean only one thing for you | |
| COMMENTARY | | Susan Antilla / Bloomberg November 04, 2008, 0:18 IST | |
If you count yourself among the wounded of the investing public, pay close attention to check where your wallet is.
At exactly the time when you may be wiser than ever about how the financial world really works, the securities industry is on a quest to educate you.
The trade group for the industry held its annual meeting this week, a somber affair relegated to the sixth floor of a New York City Marriott after years of celebrating at the swanky Boca Raton Resort & Hotel in Boca Raton, Florida.
There wasn’t a pink golf shirt to be seen in the gray- suited crowd this go-round at the gathering of the Securities Industry and Financial Markets Association, known as Sifma. Attendees didn’t even need to bring a change of clothes for evening party time. The Boys & Girls Choir of Harlem was the dinner-hour entertainment when the day’s meetings ended on October 28. Last year, the Sifma party animals danced to Hootie & the Blowfish once business was done.
You may fault the financial industry for the reckless tryst with risk that helped get us into the sorry state we’re in on Monday. But you can’t say it doesn’t know when the time has come for a little good PR.
Sifma chairwoman Blythe Masters, head of global commodities for JPMorgan Chase, reminded members that the industry’s image “is at an all-time low’’ and that the first order of business for the group is “restoring the public’s trust in our industry.’’ There is educating to do, Masters told her audience.
Helping hand
Tim Ryan, chief executive officer of Sifma, may have hinted at how the financial industry will shape its pitch. Ryan told the group he’s “irritated’’ with arguments that pit Wall Street against Main Street when, as “all of us in this room’’ know, it’s Wall Street that makes Main Street work.
Credit cards help get the bills paid, student loans enable our kids to go to school. It’s an image campaign begging to go global. Can’t you just hear the grateful Main Street testimonials about how little Billy got to go to college because of the hard work and caring of the US financial industry?
Obstacles abound for the securities industry in getting the public to come around. First and foremost are the media, always causing problems and scaring away people hungry to do business with Wall Street.
Where’s the remote?
Duncan L Niederauer, CEO of NYSE Euronext, said he got “sick of getting these phone calls’’ from reporters asking if the NYSE was going to shut amid the volatility of the past month. When CNBC asked him to go on the air to address the reports, he says he suggested that the network “close for four to five days and let us do our jobs.’’
The afternoon audience at the Sifma conference, for the first time all day, broke into spontaneous applause when Niederauer related that exchange.
I hate to tell you, Mr Niederauer, but I think investors were more traumatized by the bright red closing prices each day at your august stock exchange than anything they read in the newspaper or saw on TV.
Another media basher was Ronald J Kruszewski, CEO of Stifel, Nicolaus, a regional brokerage firm based in St. Louis. He’s looking forward to the day when investors stop watching financial news and “go back to watching Lifetime or whatever they watch.’’
Politicians are at work crafting a new regulatory structure. Depending on the result, either investors or the players who helped create this mess will have much to lose.
Fire the cops
The industry is pushing to reduce the clout of the toughest regulators — those at the state level — as part of a nice — sounding goal to streamline the rules to address the dramatic changes in markets since the Securities and Exchange Commission was established in 1934. While there’s every reason to rework the rules, beware of any structure that constrains the only financial cops who have stood up to the industry when laws were broken.
And watch carefully as the industry pushes to pick and choose the kinds of regulation that have served it — not you — best. The securities industry has had a free ride with the dopey notion that it could regulate itself in many areas, and the public is just coming around to understanding that ''self- regulation’’ didn’t work.
Little surprise, then, that the process has begun to replace this oxymoronic — no, just moronic — term with a euphemism.
“I don’t call it self-regulation anymore,’’ said Harvey Pitt, a former SEC chairman who is a lawyer at Kalorama Partners in Washington. “Private-sector regulation’’ is Pitt’s new term.
Government can spell out what’s legal or illegal, Pitt explained to the audience, but ''private-sector regulation can tell you what’s ethical.’’
In your dreams it can. Beware the retrofitted regulatory structure that leaves a smile on your broker’s face.
(Susan Antilla is a Bloomberg News columnist)
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