Outrage isn’t asleep it’s just gone underground
By Matthew Goldstein and Jennifer Ablan
Where is the outrage? A year ago, the Occupy Wall Street movement was just getting started, with mass demonstrations across the nation against corporate malfeasance and greed.
But now it’s been crickets and we don’t mean the game. There’s been no marching on Wall Street nor on the steps of Capitol Hill since the latest revelations of bad behavior in the financial sector. The populist uproar has been rather sedate in the face of the deepening scandal that big banks rigged Libor–a benchmark lending rate; JPMorgan Chase’s mounting losses from disastrous credit bets and a possible cover-up attempt; and the disappearance of customer funds from Iowa futures broker PFGBest, discovered after its founder tried to commit suicide and left a note outlining a 20-year fraud.
But the lack of populist rage doesn’t mean there’s a lack of concern about these and other scandals. We think that’s a misreading of the temperature of the American people. And if Wall Street thinks the average person doesn’t care about the nearly $6 billion trading loss at JPMorgan Chase, or the alleged Libor manipulation scandal , then the street is badly misjudging things.
As documented in “Banks behave badly redux: Is it killing confidence?” earlier this week, the spate of Wall Street horror stories is having a real impact on the markets. Interest by individual investors in stocks is way down and isn’t showing signs of coming back any time soon. Retail investors are showing their disgust by walking away—something we first noted a year ago in our story on The Madness of Wall Street.
In some ways it’s a quiet protest investors are showing and in some ways maybe more damaging than protests in the street. Maybe there is no outrage because investors and the public have come to believe they don’t expect much better behavior from Wall Street. In other words, the new norm is to expect the worst of the street.
It’s not so much a case of scandal fatigue, but rather Main Street just seeing Libor, London Whale, Facebook etc as part of the fabric of Wall Street.
And here’s the thing if trust in Wall Street has fallen so low that no one even gets that upset over scandals it could take even longer than we thought for investors to regain confidence again in the financial class.