Beyond a bailout, Wall Street needs new rules

I remember back in 2005 speaking to a friend of mine who was a real estate agent. I asked how people could afford the high home prices, that I had calculated the monthly expense associated with fixed-rate mortgages and it didn't seem tenable. She said that very few people were using fixed-rate mortgages. Instead, people were using adjustable-rate mortgages, or even more aggressive "exotic" mortgages (interest-only, etc.) to afford their new homes. Right there I knew there was a problem. So why didn't Wall Street start slowing things down on their own when they saw this? The only thing I can think of is that they put personal greed first -- they chose their end-of-year bonuses over the health of their businesses.

"Wall Street badly needs a culture change at the top. Its leaders must come to view themselves as stewards of institutions for the long term, not as temporary operators of vehicles proficient at finding new ways to throw off wealth, with everything else – including impact on the public interest – a mere detail. Institutional stewardship will mean, in practice, forgoing some opportunities for making a killing when the downside of a bet gone bad may be to jeopardize a franchise." Beyond a bailout, Wall Street needs new rules | csmonitor.com