Wall Street Read of the Week: James Surowiecki’s ‘Special Interest’

The sad truth about big, smart, journalistic Wall Street critiques is that they’re awfully hard to come by. And when you find them, they sometimes turn out to be from reporters who have a history of walking into Goldman Sachs’ headquarters in gorilla suits. (Not that there’s anything so awful about that.)

But the best ones, like James Surowiecki’s “Special Interest” piece in the New Yorker, aren’t only informed, they’re specific and calm, which is a trio that can make a piece awfully hard to argue with. He writes with educated outrage about the astoundingly lucrative loophole that lets private equity and hedge fund managers treat most of the money they make as capital gains, despite the fact that the money they’re investing is almost never their own. The loophole has been closed three times in three years by the House, but not the Senate.

It’s a problem that’s costing billions. “Too often, we’re using horse-and-buggy laws to deal with a Formula One world,” Mr. Surowiecki writes. “We shouldn’t be too surprised when we get run over.”

Speaking of which, the 2,200 pages and nine volumes of the just-released Valukas report on Lehman are going to take many, many weeks to fully digest. But the report’s insights into the firm’s atrocious financial gimmickry are already keeping readers up at night. As far as phrases that pack an era-defining punch, “Repo 105” may be our century’s “1984.”

Wall Street Read of the Week: James Surowiecki’s ‘Special Interest’