President George W. Bush came to Wall Street today to meet and greet Wall Street’s power crowd, and to reassure the capitalists that HE still has faith in the capitalist system. The president spoke in what was the first capitol building of the United States, the “sub” Treasury Building opposite those pillars of capitalism, (1) the New York Stock Exchange and (2) the venerable Morgan Bank on the opposite corner
T’was a well prepared talk, touching
on the all the key points about and surrounding the current capital markets crisis. He talked about cause and effect (lots of both, of course), and the next steps in the repair and rebuilding of the markets. This weekend President Bush will host the leaders of the world’s top 19 economies plus European Union representatives…We’re all in this together!
The loudest applause of this, the Street crowd, was when the free markets, capitalism, free trade, less government regulation, and less government involvement in businesswere mentioned. Hmm…seems like the opposite of the opinions held by people not in downtown Manhattan today…did these folks watch the Election Night results…do they read the daily papers…are they watching the plunging market indicators…the leading economic indicators…hearing about decimated 401-k’s? No matter; the mood in the hall was –we want less regulations and less government in our business!
Except…when we need the Big Government safety net spread below our financial high wire acts…when we peddle junk to investors and that flotsam and jetsam floats back to our balance sheets…etc.
The president spelled out some moves that he believes Big Government should now take to fix the mess in banking, the capital markets, the economy, and so on.
We need to address accounting rules so that investors and all players know the value of underlying assets or securities (a clear call for fair value accounting!).
The various financial instruments now wreaking havoc around the world should be regulated (e.g., credit default swaps); and, while we’re at out, let’s set up exchanges where these can trade with transparency (he said that!).
The world’s financial market leaders should band together to address fraud and market manipulation. And while they are at it, why don’t they agree on much closer cooperation.
And let’s put our heads together to modernize the capital markets infrastructure. Let’s also do the same for the World Bank and International Monetary Fund.
Let’s have greater accountability in the markets – he said that!
Government intervention is a not a cure-all, he observed. (Let’s see how things work out with the current Big Government safety net being spread under Big Business.) We need smarter government – he said that!
The takeaway, the boffo moments in the old sub-Treasury Building (now National Hall Federal Monument) today were this: It’s not about more regulation; it is about addressing the greed, exploitation and failure in the capital markets (no applause); and about the following (to loud applause):
Sustained economic growth requires free markets. This was not a failure (we’re seeing) of the free market system. Capitalism is not perfect, but it does offer the greatest choices. the greatest opportunities, and incentive, and chances to innovate, and to create. We must preserve the best of the free market principles, he urged the Wall Streeters.
Good speech, upbeat, many good points made. Of course, #44 is warming up in the bullpen now, and President Bush has but a few weeks left to make dramatic changes to fix things, and diminishing political and public opinion capital in the count down.
He finished with some plugs of the remaining free trade agreements on the agenda – South Korea, Japan, Hong Kong, Taiwan, Colombia, etc.
What will folks on Main Street, far removed from the inner circle on Wall Street this noon, what will they think of this speech?
We were encouraged that the president specifically mentioned [that improvements in] social justice and human dignity could come of out of the capital markets reforms that he outlined.
We’re reminded that only months ago the wisest heads in the room were calling for Social Security “reforms” and “choices’ – just let Wall Street get access these funds!
And a year ago there were at least three concerted and connected efforts gearing up to roll back the Sarbanes-Oxley corporate government reforms. (You can read about them in my posted columns on the Accountability Web platform, in the Commentary section by clicking here.)
An interesting afternoon in New York for President Bush – let’s see how Main Street and national media play it out.
The “reforming” of the capital markets is just beginning. Stay Tuned.
