A burgeoning genre of books and online publications continues to study — and diagnose with increasing clarity — the “Sins of Wall Street”. A recent addition to this overflowing genre — The Seven Sins of Wall Street: Big Banks, their Washington Lackeys, and the Next Financial Crisis — arranges Wall Street’s transgressions to match the Catholic Church’s classification of vices known as the Seven Deadly Sins. As an organizing principle for the book, the metaphor of deadly sins works beautifully, although it also sets the author’s line of argument on a very predictable trajectory.
Flash Boys, the latest book by Michael Lewis, employs equally dramatic metaphors of insanity and fraud: “Wall Street has gone insane”, Lewis informs us, and “The United States stock market, the most iconic market in global capitalism, is rigged.”
No doubt, these books and similar salvos from across the ideological spectrum have raised public awareness of the tangle of ironies, unintended consequences, character pathologies, conflicts of interest and interlacing opacities that have essentially derailed the whole enterprise of Modern Finance. But these are all open secrets and penetrating glimpses into the obvious. These are wasteful re-descriptions of water to a drowning man…colorful retellings of yesterday’s news.
Real innovation on Wall Street today will not come from purely diagnostic musings and flaming indictments. Innovation today requires a clear shift from diagnosis to aggressive treatment, primarily by way of breakthroughs to deeply disruptive innovation. Let’s stop complaining and Join The Revolution.