This week’s cover story of the New Yorker is “Can Wall Street be Fixed?”
Yesterday, I was in downtown Kansas City to give a lecture at the historic Kansas City Public Library (actually at an old bank building). I tried to defend Wall Street and made the case that the stock market is the entrepreneur’s and investor’s best friend. The speaking engagement was to kick off the Kaufman Foundationâ??s Entrepreneurs Week.
Of course, Wall Street has gotten a bad rap since the financial crisis of 2008, and even earlier. This week, the New York Times called SAC Capital, led by billionaire Steve Cohen, a “criminal organization” because of its insider trading violations. Wall Street gets special privileges — tax breaks and even a bailout during a financial crisis. Ponzi schemes and fraud abound. Ordinary investors often lose money on Wall Street by buying stocks at the wrong time.
Fixing Wall Street isn’t that easy. The various government agencies — the Securities and Exchange Commission, Federal Trade Commission, Commodity Futures Trading Commission, etc. — often miss the biggest frauds (Bernie Madoff)… and harass and over-regulate legitimate investment firms. Sarbanes-Oxley and Dodd-Frank regulations are so severe that initial public offerings (IPOs) have declined sharply during the past ten years, and only now are making a comeback, but only if your company is big enough to pay the lawyers to go public.
I made several points:
Read more about how Wall Street is the Investor’s best friend at Eagle Daily Investor.