On Wall St: Time will eventually prove bankers right

Fast forward to present-day Wall Street and the tables have been turned. Bankers, private equity executives and many investors are fervent believers in a brighter, richer future For all the pain experienced by borrowers, investors and banks, the more durable repercussions of this turmoil may not be financial. The real legacy of this credit squeeze could be a deep-seated public mistrust for the business world accompanied by a wave of regulation. This week, the FT reported that an association of leading banks was discussing radical measures like not paying bankers’ bonuses until the full effect of their deals had become apparent (i.e. for years). And just a few days ago, senior private equity figures vowed to bypass banks and fund deals directly from sovereign investors and hedge funds. Whatever the merits of these last two ideas (I, for one, found them misguided and impractical), they do signal growing unease at the “moneymen” (and women) of downtown New York. Such negative feelings could, of course, melt away when market conditions improve. Politicians and public opinion have been shown to have goldfish-like memories. But past experience also suggests that they have cheetah-like reflexes. The post-Enron era has shown that high-profile crises can lead to knee-jerk, all-encompassing regulation.