November 2, 2005

A disappointing Stroll Down Wall Street

Such are some of the insights from financial journalist Eric J. Weiner's new book, "What Goes Up," an extensive pastiche of interviews with many of the financial community's biggest players — encounters strung together documentary-style in an attempt to tell the firsthand story of modern Wall Street.

Those who might be expecting the "uncensored" history promised by Weiner's subtitle, in the sense of a raw, here's-what-really-happened account, will be disappointed. "What Goes Up" is uncensored only in the most literal sense: The interviews are presented directly, with minimal background detail. Although Weiner may not have censored the quotes, the interviewees themselves appear to have chosen their words carefully, offering few surprises. The result is a mostly rah-rah narrative of Wall Street as the lively land of entrepreneurial heroes who rarely do wrong — or if they do, it's not their fault.

For example, Jerome Kohlberg, the first K of the famous leveraged-buyout firm KKR, concedes that, "Of course, what we were really doing, in my view, and I've thought about this a lot, was taking earnings or value that should've gone to the shareholders and bringing it unto ourselves." But lest he admit guilt, he quickly adds: "Corporate America, executive America, was responsible for a lot of this. That's the way I look at it." Similarly, Vanguard founder Jack Bogle admits that in the late '90s "we brought out technology funds, all at the high of the market, without any thought of whether any of this would be good for investors. They were good for the managers…." But again, the catch: "[B]ringing out funds only a moron would buy is not illegal." Wall Street, it would appear, is no place for tentative egos.

For the most part, it is this boosterism that guides the book. The episodic narrative begins with the story of Merrill Lynch co-founder Charlie Merrill, a Wall Street outsider who once had to drop out of college for lack of funds. In the early 1940s, Merrill came to Wall Street with the radical idea of dispensing with the "mumbo-jumbo from Harvard men in paneled rooms; let the stock market's workings henceforth be intelligible even to the small investor" (as his son the poet James Merrill describes it), making him, in Weiner's words, Wall Street's "first great democratizer."

The book goes on to salute the removal of other barriers to popular market entry: the rise of mutual funds, the end of fixed commissions, the arrival of Nasdaq in the 1970s. Former Nasdaq President Alfred R. Berkeley III recalls how Nasdaq founder Gordon Macklin "loved representing the little guy…. He was all about inclusion." And by the time the Internet arrives, just about everybody offers some version of the bland "technology democratized the stock market" insight.

Although scandals do rear their heads, they are either recounted in a matter-of-fact way with few new revelations or dismissed as circumstances magnified out of proportion by zealous, limelight-seeking government prosecutors. As one New York Stock Exchange broker says of former NYSE head Dick Grasso, whose $188-million pay package became a symbol of executive greed two years ago, "I don't personally care what you pay Dick Grasso…. So whatever you think of him, the fact is that we are here today, thriving, because he was the leader."

"What Goes Up" offers plenty of colorful anecdotes and outsize personalities, and its necessarily conversational style makes the book quite readable. Different voices keep the narrative fresh, and sometimes the first-person, blow-by-blow accounts are real page turners. But in the end, there are few surprises. It is the view from Wall Street and, as such, it's mostly the sort of high-handed self-congratulation you might expect.

Lee Drutman is the coauthor of "The People's Business: Controlling Corporations and Restoring Democracy."

Copyright 2005 Los Angeles Times

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