So, now Felix Rohatyn, the eminence grise of Wall Street who advised RJR Nabisco on its sale KKR in the 1980s, has, apparently, in his old age come to the conclusion that Wall Street is of questionable value to society. I haven't read his new book, but in a review of Dealings: A Political and Financial Life (Simon & Schuster), Rohatyn has grown "uneasy about his own industry and perhaps himself," says Andrew Ross Sorkin in today's New York Times. And perhaps it is well he should.
Sorkin quotes Rohatyn, "No matter how much I try to be really objective, the financial community has not covered itself with glory in these last 50 years." Rohatyn is quoted as saying that's a problem, since, at 82, he was a big player in that milieu for all those years.
For a better, more interesting review of Rohatyn's book, turn to Frobes blogger, Robert Lenzner, in his column, The Bottom Line. "Then, there’s the M&A ace. Rohatyn doesn’t realize he has revealed that he leaked an inaccurate, untrue story to the press about RJR, the largest LBO in history in order to trigger higher bids for the company. To his credit he admits to a concern about the fallout from 'laid-off employees, damaged communities, and cutbacks in employee benefits from the assumption of so much corporate debt.'
"In other words, this capitalist who preaches reform, has reason to be chagrined about his own role in the raging avaraciousness of Wall Street these past 30 years."
Nobody said freedom --- deal making, the buying and selling of companies, pursuing your own interests --- was a picnic (i.e. creative destruction), but lying to the press to get a better price on a deal is rather unsavory. It's hate Wall Street time, these days, and perhaps rightly so. But then the government and investors at large were just as guilty for the credit/housing bubble as Wall Street. In short "rational self interest" gave way to outright greed --- up and down the ranks of our society. And there is little to be down about it, except for creating a police state in which government doles out what it thinks society needs. And that works not at all.
As David Boaz of the Cato Institute wrote in 2009, "In the current economic crisis, our first task is to understand it and its causes. This was a crisis caused by regulation, subsidization, and intervention, and it won't be cured by more of the same. Christopher Hitchens had a point when he wrote, 'There are many causes of the subprime and derivative horror show that has destroyed our trust in the idea of credit, but one way of defining it would be to say that everybody was promised everything, and almost everybody fell for the populist bait.'"