Wallstreet has rules. They're just not enforced. People would be shocked if they knew, for instance, how many hedge funds simply operate on a model of "black edge" insider trading.
Taking the high road comes at considerable unrecognized cost was all I was trying to say.
It wasn't overly easy to find.
At this point, the major gap in our financial regulatory process is at the detection layer, not the investigations layer. If you can keep specific scenarios under wraps, you can avoid things quite easily, especially if the scenarios you do cover are impressively complex and thorough. So you hire PhDs in math and physics to identify and create your algorithms. They do a great job identifying scenarios where known criminal activity occurs, but they aren't informed on the specific, complicated, and should-be-totally-illegal actions your firm is engaged in, so they are basically shooting in the dark with no chance of finding the real misdeeds. These algorithms are genius-level complex, greatly reducing the number of government employees that will be able to decipher them. You create hundreds or thousands of them, making it prohibitively difficult for anyone in a regulatory agency to take the time to understand them all, then you assure the regulators you have all your bases covered. You show them the evidence of all the wrongdoing you've identified (also an insurmountable mountain of data) and if you do not leave any glaring holes, they have to nod and walk away.
Financial regulations are important, but the idea that regulators could every truly keep the financial markets from abusing the rest of us is nonsense. They can only do so much.
Oh, and setup an anonymous tip-line. To allow other firms to "investigate" others in order to make themselves look better (might not happen every year, but I'd imagine it would be an option of last resort if something really bad needed to be covered).
Shady things will still happen, but there will be attempts to reduce it just enough so others take the hit. Plus, the public gets a few show trials to make them believe the regulators have teeth.
Doesn't solve everything here, but it probably helps a lot.
If you replaced "Wallstreet" with "War", your statement would be no less true.
Don't get me wrong, things slip by on both fronts. But when it's financial, there isn't any sense of moral/righteous indignation to incite actual action. It's more like, "oh, bankers are screwing people again? Well, that's what they do. They'll just worm out of this like they do everything else."
That said, until very recently I would have agreed with you completely.
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