Just 48 hours before the Securities and Exchange Commission accused Goldman Sachs of fraud, several economists meeting at the Federal Reserve came to the conclusion that the city would not truly recover from the recession until Wall Street begins hiring again. That seemingly obvious truism ought to serve as a warning against cheap populist demagoguery as the case against one of Wall Street’s titans moves forward.
If Goldman is guilty as charged, it should be punished. Those in the financial industry who broke laws and regulations during the boom should be prosecuted and punished. But it would be wrong to condemn the entire financial services sector because of the wrongdoing of a few miscreants, even if they happen to take the form of enormous investment banks.
From the steps of the Capitol in Washington to the steps of City Hall, there are full-throated cries for massive new regulation and draconian punishment for an industry that, quite simply, drives the entire tristate economy. The well-being of millions depends on the financial health of Wall Street and its products. And it is important to remember that those millions include not just highly paid brokers and executives but lots of solid middle-class and working-class jobs as well.
Punish the guilty, for sure, even if they happen to be Wall Street’s standard-bearer. But punish only the guilty.