Main Street Out for Wall Street's Blood
Retribution is in the air.
Why do I look at your when you make me hate you too?
I sense a smell of retribution in the air.
- Guns N' Roses, "Get in the Ring"
Man, but it's a lousy time to be a banker.
Not only are financial professionals facing the most hostile market environment in a generation, but backlash -- thanks to their role in the current crisis and the size of their paychecks during the run-up -- has politicians and the public alike out for blood.
After last week's World Economic Forum in Davos, Switzerland, which attendees were calling "the grimmest ever," the witch hunt for those responsible continues . And increasingly, finger-pointing and blame are being directed at the world's financial professions.
According to Bloomberg, Wall Street was virtually unrepresented in Davos, with JPMorgan's (JPM) Jamie Dimon the lone banking CEO in attendance to defend his ilk. To his credit, Dimon owned up to past mistakes, but openly wondered whether blame should also be directed towards regulators: "God knows, some really stupid things were done by American banks and by American investment banks. To policy makers, I say: Where were they?"
The mood of the gathering, typically a highbrow affair where the ultra-rich and ultra-influential flaunt their good fortune for the rest of the world to admire, was humble, even depressed. And rightly so.
Opinion on Main Street has been turning against Wall Street for months. But as details of just how much bankers and traders are paid -- even as their firms receive billions in taxpayer support -- continue to emerge, things are turning hostile. Last night, at an otherwise good-natured Super Bowl party, one guest muttered aloud, "Can you believe how much these banking [expletive]s got paid? People are losing their jobs, and they're still taking home million-dollar bonuses." The crowd agreed; it was a "shameful" display of unadulterated greed.
The irony -- and evidence the changing social mood isn't just the usual negativity that accompanies economic downturns -- is that this didn't just start last year: Bankers have always taken home outrageous sums. Year-end bonuses weren't paid out for the first time in 2008; greed didn't suddenly rear its ugly head in the bowels of Manhattan. Nevertheless, people who couldn't have cared less that investment bankers and traders earn massive salaries -- even as their firms cut staff -- are suddenly up in arms.
And while many argue this time is different -- since the likes of Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC) are now on the government dole, that's simply canon-fodder for political posturing.
What's really changed is the mentality on Main Street – we no longer look fondly upon the pin-stripe suited banker or dapper real estate mogul. Flashy cars get sneers as they roar past, Louis Vuitton bags are carried by only the most egregious snobs. Our envy has turned to disdain.
The sentiment of millions, however, doesn't change overnight. Just as it took years to arrive at the apex of bling, so too will it take time for the revulsion at unnecessary excess to fully take hold.
But take hold it will.
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