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Commentary: Welcome to Wall Street, the sequel

September 29, 2008

Author Tom Wolfe wrote a bestseller in 1987 called, "The Bonfire of the Vanities."

The title of the book alluded to 15th century Italy, when religious fanatics staged public fires at which they burned items thought to encourage lives of sin, things like mirrors and cosmetics.

Wolf's "Bonfire" popularized the term "masters of the universe" to refer to shallow, highly compensated Wall Street types who made big bucks and lived lavish lifestyles, often at the expense of others.

The novel told the story of master Sherman McCoy, a Wall Street bond trader whose extravagant life went up in flames as a result of his greed, his overindulgence and his delusion of invincibility. The hapless Sherman burned at the stake of his own vanity.

That same year, Oliver Stone directed a feature film called "Wall Street," starring Michael Douglas as master of the universe and unscrupulous corporate raider Gordon Gekko.

Today's good-natured gecko of the Geico ad campaigns notwithstanding, Douglas' Gekko conjured a reptile of a nasty, slippery sort, his slicked-back hair burnishing his image of evil. At the end of the movie, Gekko got his comeuppance. He was hoodwinked by an apprentice and about to be busted by authorities. He would presumably go on trial for securities violations. One can only hope he was convicted. The '80s were the days of junk bonds, corporate takeovers and leveraged buyouts. The era's deal-makers became the stuff of legend and earned theretofore unheard of amounts of compensation. I guess you could say it was Wall Street in its heyday. Flash forward 21 years to today, when Wall Street as we have known it for so long is a thing of the past. Lehman Brothers and Bear Stearns, venerable icons that embodied both the glory and excess of the '80s and '90s, have bit the dust. Morgan Stanley and Goldman Sachs, two more icons of The Street, have thrown in the towel and opted to become banks. The mighty Merrill Lynch is now owned by a bank.

At IBJ deadline, the Fed, the Treasury and Congress were wrangling over the details of a $700 billion bailout plan for what is unanimously agreed to be the worst financial crisis in our country since the Great Depression.

The irony is thick.

In their glory days, the Lehmans and Goldmans represented the ultimate in success. The stories of the deal-makers and the riches they accumulated spawned a whole generation of business/finance majors who dreamed of landing a job on The Street and becoming masters of the universe.

Now, many of their fates are uncertain. That dream shattered.

At its best, art of every kind throws a mirror up to humanity and challenges us to take a look at ourselves. The better the art and the more closely we look, the more likely we are to gain insight. So what do we take away from this? No doubt, both Wolf and Stone through the written word and moving picture were at work in pursuit of such a result. It's clear they were warning us about the potential consequences of unbridled greed, lives of excess and a void in values. On a more mundane level, maybe they were warning us about too much free-market economics and not enough oversight.

Those who have argued so vehemently for less and less government regulation and more and more open markets have created a situation where they will surely be slapped with exactly what they don't want.

Those who have argued for John McCain because-as a wealthy Republican, he "understands"-have created a situation in which the man on the street resents them even more. McCain's chances to become president may now be irretrievably lost.

And now we are left to see what new world will unfold. What will life be like without The Street?



Katterjohn is publisher of IBJ. To comment on this column, send e-mail to ckatterjohn@ibj.com.
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