Former Wall Streeter turned writer William D. Cohan goes to bat for his old team in the new book Why Wall Street Matters. Cohan’s argument is basically this: Wall Street makes it easier to access capital, which drives commerce in a million different ways, from lending money to small businesses to allowing you to float your purchases on your credit cards each month. An overreaction by regulators after the 2008 financial crisis has dried up a formerly liquid market, making it more difficult to access capital and thus hurting the economy.
Further, Cohan argues that the regulations put in place after 2008 do not get at the root of the problem: Wall Street employees get rewarded for taking risky chances with other people’s money. They get huge salaries and bonuses when things go well, and get bailed out when they don’t. With no skin in the game, what incentive do they have to change? Regulations may slow them down, but Cohan argues that those regulations are hurting you and me more than they are helping us (and more than they are hurting those greedy Wall Streeters you hate).