Receiving Wide Coverage ...
Defending the Financial Sector: The Economist and the upcoming issue of the Times’ Sunday magazine both have articles warning against excessive banker-bashing. “Could fair criticism warp into ugly prejudice? And could ugly prejudice produce prosperity-destroying policies?” asks The Economist’s “Schumpeter” column, which offers historical evidence for the affirmative on both counts. The “ugly prejudice” part is salient – the piece notes that over the centuries, hatred of moneylenders has often been intertwined with anti-Semitism in the West and anti-Chinese bigotry in Asia. “This is not to say that the Occupy protesters are guilty of ethnic prejudice: they belong to a class and a generation that is largely free from such vices. But demonisation can easily mutate into new forms. … Railing against the 1%—particularly when so many of them work for companies with names like Goldman Sachs and N.M. Rothschild—can unleash emotions that are difficult to cage.” The Times piece focuses on the economic case – without “Wall Street,” writes Adam Davidson from NPR, “the poor would stay poor … there would be no middle class … [and] lots of awesome things would never happen” (e.g. the development of lifesaving drugs that require risk capital). We’ve put air quotes around “Wall Street” because Davidson defines it broadly to include commercial banks and even insurance companies along with investment banks. But he at least defines his terms, so we’ll refrain from our usual rant about the limited descriptiveness of this ambiguous category.
The Bain of His Campaign: Some of Mitt Romney’s rivals for the Republican presidential nomination, most prominently Newt Gingrich, continue to attack him for his work at the private equity firm Bain Capital in the 1980s. The Journal says the kerfuffle over Bain’s restructurings of portfolio companies is “a proxy for a broader argument about the rough and tumble of market capitalism.” For those who missed all the What-Romney-Did-at-Bain stories that have been in the media for the last few months, The Washington Post has one today. “Even the successes touted by Romney’s campaign involved some painful decisions and layoffs,” the Post says. “Both the successes and the failures reveal the candidate’s faith in ‘creative destruction,’ the notion that the new must relentlessly replace the old so that companies and the economy can become more efficient.” Interestingly, two GOP hopefuls – Jon Huntsman and Ron Paul – have criticized the populist attacks on Romney. “Capitalism without failure isn’t capitalism,” said Huntsman, in a remark consistent with his call for
Two Partners Leaving Goldman: Edward K. Eisler and David B. Heller, two of the four co-heads of Goldman Sachs’ securities division, are both “retiring” from the investment bank, according to an internal memo. (We’ve put “retiring” in quotes because they’re expected to resurface in the business, probably on the buy side.) “It was unusual for two divisional heads to retire on the same day,” says the Times, noting that more than 30 partners have left Goldman Sachs since October. The exodus suggests that on top of volatile markets, new regulations and a potentially secular slowdown in trading business, all those Occupy Wall Street rallies and
Wall Street Journal
Proxy season is coming soon, and activist investors are expected to make an especially
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“Heard on the Street” suggests that the banking industry should reconsider its “fixation” with return on equity as a gauge of success, and perhaps