“Wall Street has to change in painful ways. The major firms, gloriously profitable just a few years ago, are not earning their cost of capital. They’re failing, and everyone seems to agree on their near-term future: lower returns and lower profits. The firms have to get smaller, cut expenses, live less large, pay people less. The glory days are over. But hold on. Wall Street’s glory days are over every 10 years, like clockwork. They were over at the end of the ’70s, after a decade of market stagnation; again at the end of the ’80s, when takeovers and leveraged buyouts faded; at the end of the ’90s, with the dot-com bust; and now with the subprime disaster. Every time, Wall Street comes back in new ways that no one imagined. That pattern is hopeful for the firms. For Barney Frank and the legions of new regulators he helped to create, it’s worrisome.”
Geoff Colvin in Fortune
The Week
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