Wall Street Banks On Greener Pastures

Atrios smells a rat and Big Tent Dem has a good laugh as the banksters collectively seem to pick up their toys and are heading to the greener grass on the other side of the regulatory fences.

Top bankers have been leaving Goldman Sachs, Morgan Stanley, Citigroup and others in rising numbers to join banks that do not face tighter regulation, including foreign banks, or start-up companies eager to build themselves into tomorrow’s financial powerhouses. Others are leaving because of culture clashes at merging companies, like Bank of America and Merrill Lynch, and still others are simply retiring early.

This is certainly a concern for the banks losing top talent. But other financial experts believe it is the beginning of a broader and necessary reshaping of Wall Street, too long dominated by a handful of major players that helped to fuel the financial crisis. The country may be better off if the banking industry is less concentrated, they say.

“If the risk-taking spreads out to these smaller institutions, it is no longer a systemic threat,” said Matthew Richardson, professor of finance at the Stern School of Business at New York University. “And innovation is spreading out too. This is a good thing.”

In past downturns, the big firms suffered but bounced back when the economy returned to health. This time, their pain may be more lasting given the depth of the crisis and the government’s efforts to rein in Wall Street’s practices as it tries to turn around the economy, a process that may take years.

To deter the people it thinks caused the crisis, the government is clamping down.

Sensing a shifting tide, talented bankers who fear a dimmer future at banks that have taken taxpayer money are migrating to brash boutique firms like Aladdin, which are intent on proving their critics wrong by chasing fast profits and growth in hopes of one day rising up as challengers to the old guard.

This to me screams "shot across Obama's bow." It's a warning to him and Timmy not to overregulate these start-ups and new financial firms. It's all about the money to these guys, and the story is clearly telling Obama not to mess with them.

It's actually funny if you think about it. Exactly what are these "financial titans" going to put on their resumes when they go job hunting? "Lost two billion at AIG!" "Invested heavily in toxic assets!" "Helped drive Lehman Brothers out of business!" That'll look good.

But hope springs eternal with these guys. We'll see how Obama responds.