Does Wall Street Owe Main Street An Apology?
Does Wall Street Owe Main Street An Apology?
Democratic Sen. Sherrod Brown of Ohio summed up at today's Senate hearing the anger from tens of millions of Americans on the proposed $700 billion bailout of the financial sector. Wall Street, he argued, 'didn't care one bit' what its mortgage practices ″ the ones that created today's mess ″ were doing to neighborhoods in Cleveland and around the country.
Then came his interesting but odd question: Do you think Wall Street owes the American people an apology?
Mr. Brown didn't quite specify what the apology would do. Some Wall Street executives probably would be happy to offer one ″ in writing and on camera ″ in exchange for a $700 billion bailout.
But the question went to the heart of the trouble that Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke face in selling the unprecedented emergency plan to Congress and the public over the course of a week.
Mr. Bernanke was a Princeton University economics professor before joining government earlier this decade (first as a Fed governor, then as a White House economic adviser, then as Fed chairman). Mr. Bernanke earlier noted that he was criticized upon taking the job for his lack of Wall Street ties. 'I've never worked on Wall Street,' he explained. 'I don't have those interests and those connections.' Mr. Bernanke sought to explain repeatedly that if credit markets don't function, jobs will be lost, houses will face foreclosure and the economy will contract.
Responding to Mr. Brown's question, Mr. Bernanke again said Main Street is tied to Wall Street through credit. 'Wall Street made a lot of mistakes and regulators made a lot of mistakes.' Under follow-up questioning again, Mr. Bernanke was forced to note that Wall Street 'is an abstraction' ″ a statement even more true this week after the two surviving independent investment banks converted into bank holding companies.
Mr. Paulson is from Wall Street, leading Goldman Sachs before joining the Bush administration.
'I share the outrage that people have,' he said. 'It's embarrassing to look at this. I think it's embarrassing for the United States of America. There is a lot of blame to go around' for irresponsible lending practices, overly complex securities and rating-agency failures.
'Let's fix the problem to have the least negative impact on them and then let's go out and deal with all these problems and figure out how to make sure that we minimize the likelihood they'll happen again,' Mr. Paulson said. Sudeep Reddy
Sudeep Reddy
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