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The Day I Freaked Out

A year ago tomorrow, Lehman Brothers Holdings, Inc. filed for bankruptcy. That was a very scary day for all of us, but in particular those of us whose livelihoods are connected to Wall Street.

But a few days later, the rumor started. Goldman Sachs may not make it. There was a fear of a run on the brokerage firms. Similar whisperings about Morgan Stanley. Many felt that if this happened a cataclysmic collapse of our entire economic system could follow. I really started wondering if the US would simply cease to be able to function as an economy, and how we could have gotten to that point.

As I watch Pres. Obama on TV speaking right now about the financial system at Federal Hall in downtown Manhattan, I am remembering those few freak out days. Luckily, on September 21, both Goldman and Morgan Stanley agreed to be regulated as banks and this ensured they would not, in fact, collapse. Both have returned to profitability and this is good.

The President seems ready to roll out “reforms” of the financial system regulatory environment. He is not being greeted with great cheers from those sitting steps from Wall Street listening to him. He is giving them a little trip to the woodshed, claiming the free market is good, but the lack of regulation a year ago may well have been a major cause of the meltdown and the naysayers best come aboard with his plans.

Many of the wealthiest Wall Street leaders are Democrats. But they always strongly resist any left-leaning efforts to add more regulation to the financial system. But this time it looks like they are going to have to accept it, in some form. It is a shame that a group of fraudsters causes the entire sector, including the tons of legitimate players, to pay the price.