09/21/2011 02:23 pm ET Updated Nov 21, 2011

Wall Street: In the Dumps

On the three-year anniversary of the financial crisis, Wall Street is
in the dumps. Not the same dumps as the big banks and Wall Street
firms found themselves in back in 2008, but the mood on Wall Street is
pretty dark.

It's not easy to refrain from vomiting when millionaires and
billionaires cry on your shoulder, but for the sake of making a larger
point (just bear with me for a few paragraphs) here are some of the
sob stories I keep hearing at bars where traders and bankers drink
themselves silly (or I should say sillier) and at places like San
Pietro restaurant, the mid-town Manhattan cafeteria for the banking

From what I'm hearing, it's not just that America hates Wall Street
for its greed, excess and bailouts that has the typical Wall Streeter
so glum; in fact, the typical Wall Street executive can live quite
comfortably with being hated by some guy in Kansas who actually works
for a living.

Wall Street's foul mood is all about money: Three years after the
collapse of Bear Stearns and Lehman, and the taxpayer-financed
bailouts of Citigroup, Bank of America, Morgan Stanley, Goldman Sachs
and JP Morgan, Wall Street isn't being allowed to return to old ways
of making money in any way it can.

Profits are down this year and so will be bonuses for 2011, big time,
I am told, at least by Wall Street standards. How much are bonuses
off? It all depends on who you speak to and where they work; my guess
is look for average reductions anywhere from 10 percent to 30 percent
depending on just how bad the bank is handling the lousy business
environment of low levels of trading and shrinking profit margins.

By that measure, people at basket-case banks like BofA might want to
start looking for jobs at places like JP Morgan -- and they are.
Resumes are flying out of BofA, which just announced 30,000 layoffs and
today, had its credit rating cut by Moody's.

It wouldn't be so bad if this was a one-year phenomenon. The
relatively new Dodd-Frank financial reform legislation is just
starting to kick in and crushing profits for the foreseeable future as
banks have to exit certain businesses like proprietary trading. Throw
in new global banking regulations also crimping future profits and
that means even smaller profits and bonuses to come.

And it's so unfair, I keep hearing from the Wall Street whiners. It's
unfair because all the new regulations are the result of the financial
crisis, which many on Wall Street still believe wasn't of their own
making. An aggressive media (they put me high on the list) whipped the
markets into a frenzy in 2007 and 2008, exaggerating the exaggerated
risk taking at Bear Stearns and Lehman Brothers, whose combined
downfall set the stage for the wide financial crisis, and now, all
those nasty new regulations.

Throw in the actions of short sellers, who made so many billions by
spreading "rumors" exaggerating the exaggerated risk taking at Bear
and Lehman, and the rest of the big banks and Wall Street had no
choice but to beg the taxpayers for all those billions in bailout

"And we paid it all back," one senior investment banker at a big firm
recently told me. All those billions in bailout money were paid back
with interest, this executive reminds me. Some firms like Goldman
Sachs were offering to repay the government almost immediately after
taking the money, which is further proof that the bailout wasn't
really a bailout, but something like a temporary loan.

Its pretty astonishing that the same Wall Street firms who couldn't
control risk taking for all those years, can produce a fairly coherent
message articulated by both CEOs and traders alike, even if it's all

What most people on Wall Street fail to accept as fact is that they
now work for the government. The minute Wall Street took even a dime
in government bailout money it became a ward of the state. Traders,
bankers and even CEOs have been reduced to bureaucrats, whose ultimate
boss is the guy in the White House who whenever his approval rating
dips below 50 percent (which is almost all the time these days) calls
them nasty names and demands that they make less money.

Working for the government has its perks, of course. Banks were able
to repay the government all the bailout money and pay their execs fat
bonuses within a year or so after the bailouts because the government
helped them in every way imaginable. It's almost impossible not to
make money on Wall Street when it costs almost nothing to finance your
operations thanks to zero percent interest rates, QE1, QE2, which
brought down interest rates even further, not to mention all the other
programs instituted by the government to help support the banking

The price paid for helping Wall Street and the banks is a modestly
stronger financial sector, but a weaker overall economy. Main Street
gets screwed because investors bid up commodities in search of higher
returns, but that means higher food and gas prices for Average
Americans. Zero percent interest rates also means that even
risk-averse investors (think the elderly) must roll the dice in the
stock market because money market funds and other low risk investments
offer almost no return these days.

Of course, the new regulations are now squeezing bank profits and
bonuses, but the biggest sin of Dodd-Frank and the global regulations
being pushed on our banks known as "Basel III" is what it's doing to
Main Street rather than Wall Street. Small businesses can't get loans
if banks are under pressure to hold more capital, one of the big
reasons we have 9-plus percent unemployment well into President
Obama's much-hyped economic "recovery."

Finally, it is pretty amazing that Wall Street executives with
educations from the nation's best schools and make boatloads of money
consider themselves "victims" of class warfare and ambitious
reporters. In their world, if reporters like me never mentioned the
fact that Bear Stearns borrowed 30-to-40 times more money than it had
in capital to finance mortgage-bonds that were losing money, the
financial crisis would have been a mere blip.

In the real world, the Wall Street complainers should be happy to have
government jobs and just keep their mouths shut.