Michael Lewis (of Liar’s Poker fame) and David Einhorn (of shorting Lehman fame) have published an op-ed in today’s NY Times. It diagnoses and provides solutions to Wall Street’s problem(s).
The bottom line (emphasis added)?
Our financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The pressure to do this in today’s financial markets is immense. Obviously the greater the market pressure to excel in the short term, the greater the need for pressure from outside the market to consider the longer term. But that’s the problem: there is no longer any serious pressure from outside the market. The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.
The piece goes on the expose the well known cozy relationships between Wall Street, the credit rating agencies, and the SEC, and to criticize Treasury, the Fed, and Congress for poor ad hoc solutions driven by short-term market considerations and industry lobbying.
It ends with a series of “perfectly obvious” changes to be made to the financial system. These are a manifesto for action. Digest them and begin regurgitating to everyone. A movement must be built.
I hope Barack Obama is reading this piece. I’m forwarding the Chuck Schumer (not likely to be helpful) and Hillary’s replacement (it better not be Caroline Kennedy).
On Wall Street, the fix is in.
It’s time to fix the fix.