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An irreverent Wall Street Blog
by Bill Singer Subscribe to RSS Feed: Blog Home | Past Entries The Cheshire Cat of Wall Street Written: June 27, 2008

As a much younger man in 1983, I started my career on Wall Street in the Legal Department of what was then known as Smith Barney, Harris Upham & Co.  From there I served stints at the American Stock Exchange, the NASD, Integrated Resources, and eventually pursued a career as a law partner whose practice focused on securities-industry regulatory matters.  It’s been a long career.  More than a quarter of a century.  I loved working on Wall Street.   It was exciting.  We raised money.  We invested in individuals and companies with ideas.  We made things happen, and, along the way, often changed lives for the better.  Not always.  Come on – if you’ve read my columns over the years you know I’m no hypocrite.  Wall Street has been plagued by more than a few crooks, but when we stumbled, we still managed to dust ourselves off and get back up.

Do I think the sky is falling and the end near? No.  As I often say: this too shall pass.  And it will.  Unfortunately, it’s not just whether storms pass.  They always do.  The more important question is what do they leave in their wake.  This time I see far more devastation than usual. 

Many of you have asked me in recent months what we on Wall Street can do to turn things around.  You have complained to me that the industry trade groups seem unwilling to enter the ring.  You say that those in power – the politicians and the regulators – seem only to have made things worse and now seem clueless. 

Trade Groups

The independent/regional brokerage community needs an effective trade group to formulate a gameplan for recovery. Those big firms who sucked the life out of local competitors and filled the pockets of politicians with campaign donations (and dominated the regulators) never lent the small bucks to the moms and pops of our country.  Sure, now go ask Bear Stearns to raise $2 million for that private placement for the small factory just outside of town. The font of local capital formation was always the independent/regional brokerage community.  As with the deceased Golden Goose, those who strangled it seem stunned that it no longer issues golden eggs.  Where are the dollars coming from to jump start the local business that employed the town folk who paid the county's taxes which footed the bill for the services we all need and rely upon?  Where the hell were the trade groups defending these smaller firms? Show me the trenches they dug on the battlefield.  Show me the lines that these groups drew in the sand and said "here but no farther."

The hundreds of thousands of registered men and women who sell the stocks and raise the dollars need an effective trade group to protect their rights and promote the professionalism of their chosen career.  They never had one and still don't. They have ideas.  They have experience.  No one seems to care.  They continue to be disenfranchised from any meaningful role in the process while their firms fail, their offices close, and they are kicked to the curb for corporate savings.

 In recent months,  I have spoken to every trade group that would take my call (sometimes it took many of those to get one response), and I even spoke to folks looking to start new trade groups.  Sadly, I could find no place to call home.  The disaster in our markets requires more than a once-a-year effort to field a slate of candidates to oppose those nominated by FINRA; and it requires the will to push back when regulators are out of line.  Instead, I see only petitions, white papers,  masturbatory meetings, and more and more folks getting appointed to more and more useless committees and subcommittees.  For now, I am done with these trade groups and like a ronin in those Japanese samurai movies – belonging to no master – I will fight only the fights I believe in.

Politicians

In recent months, I have also spoken to far too many state and federal politicians, or, more accurately, to their gatekeepers who assure me in practiced lines that their boss takes my points seriously and would love to chat with me—in the future.  Then my email address or phone number mysteriously gets hit with tons of messages from folks looking to raise money for political campaigns.  Dejectedly, I watch the hearings where the chairs are filled with the same tired voices espousing the same failed solutions and answering the same regurgitated questions. Give 'em a show--that's about all we get for our two bits.  Yet more proof that the public always gets what it deserves.  We elected these incompetents, and we re-elect them. 

Regulators

And, yes, in recent months,  I have called and written to every regulator you could imagine.  Got back any number of polite replies.  Let’s do lunch.  Let’s have coffee. I starve and go thirsty.  Incredulously, I see new rules churned out daily beyond a beleaguered industry’s ability to absorb them.  You complain. They listen—but they do not process what you say.  It’s the same old game.  By appointment only.  The favored cronies get to whisper the same flattery in the same receptive ears.  Nothing changes.  But that those who regulate had some meaningful industry experience.   You know, Bill, if it were up to me, I’d hire you. We could use folks like you in regulation.  But for now, we’ve decided to go in another direction.

Lost on the Road

So, it is to this place in the road that you and I have come and now stand, with Alice, before the Cheshire Cat.  We ask them all: the trade groups, the politicians, the regulators—which way leads us out of here?  But they just smile and sit there content with the apparent security of their jobs.  But, compelled to give some answer lest they come off as rude, they utter a Zen-like response:

One day Alice came to a fork in the road and saw a Cheshire cat in a tree. Which road do I take? she asked. Where do you want to go? was his response. I don't know, Alice answered. Then, said the cat, it doesn't matter.
Alice in Wonderland by Lewis Carroll

Oh, can't you just hear Bob Dylan's verse?

How does it feel

To be on your own

With no direction home

Like a complete unknown

While I would love to end this column with some poetic flair of my own, I commend to you these words of author William Faulkner when he accepted his Nobel Prize for Literature:

decline to accept the end of man. It is easy enough to say that man is immortal simply because he will endure: that when the last dingdong of doom has clanged and faded from the last worthless rock hanging tideless in the last red and dying evening, that even then there will still be one more sound: that of his puny inexhaustible voice, still talking. I refuse to accept this. I believe that man will not merely endure: he will prevail. He is immortal, not because he alone among creatures has an inexhaustible voice, but because he has a soul, a spirit capable of compassion and sacrifice and endurance…