ALEX CHADWICK, host:
This is Day to Day. I'm Alex Chadwick.
MADELEINE BRAND, host:
And I'm Madeleine Brand. The federal government has been doing a lot lately to prop up U.S. banks. This week, the Treasury Secretary said taxpayers will buy $250 billion worth of shares in the nation's leading banks. The government will also buy those so-called toxic assets the banks can't get rid of. So what is Wall Street doing to fix its own mess? Robert Lenzner is national editor for Forbes Magazine. Well, what is Wall Street doing?
Mr. ROBERT LENZNER (National Editor, Forbes Magazine): Well, Wall Street has been bailed out by Bernanke and Paulson. We came very, very close, due to the poor risk controls and greed and stupidity of Wall Street, we came very, very, very close last week to a total systemic breakdown of the financial markets. So I would say Wall Street is on the passive end of this and is being helped by the federal government to get its house in order, which is going to take some time to do.
BRAND: But should Wall Street be taking a more active role? Should there be...
Mr. LENZNER: They haven't been smart enough to know what they're doing. They've made one mistake after another. I don't think they - that Wall Street comes off in a very decisive or leadership role in this crisis.
BRAND: Well, why isn't there a group of leading CEOs coming together and saying, OK, we need to do this. We need to figure out how to get ourselves out of this mess and how to move forward. Haven't there been such leaders in the past?
Mr. LENZNER: There have been, but there's never been such a complicated and global crisis before. In other words, back in the late 1960s, imagine this, the bookkeeping and back office operations of the Wall Street brokers - now that I think about it, quite extraordinary, were in a total mess, and as a result of that, many firms went out of business. And then a group of people, one of whom was Felix Rohatyn, who was an important partner of Lazard Freres, came in to work to make sure that the New York Stock Exchange wasn't going to close because of this and arranged marriages, shotgun marriages, between troubled brokers and firms that were in a much healthier state.
Back in the 1930s, when Wall Street was really on its backside, and the markets had declined, you know, 86 percent, there were, there was a gentleman by the name of Sidney Weinberg, who was the very young but managing partner of Goldman Sachs who became a leader.
BRAND: You mention Felix Rohatyn. Where is he now? And have you talked to him about the current mess? And what does he think, what does he say?
Mr. LENZNER: Right now - well, he thinks that there must be a Bretton Woods conference of - that this is now a global problem. And just as we had during the very end of the second World War in 1944, all the Western nations came together, realizing that there had to be institutions set up to loan money to economies that were in trouble. It was then that they set up the IMF. It was then that they set up the World Bank for the underdeveloped countries and an exchange stabilization system for trading currencies.
Rohatyn also believes we should reduce the leverage on Wall Street. We should get rid of the ability to have these huge off-balance sheet financing vehicles which many of the banks have had, which really amount to putting a lot of debt in the bank that doesn't show up on the balance sheet.
BRAND: These are the credit defaults swaps.
Mr. LENZNER: We should get rid of all these gimmicks that have gotten people in trouble.
BRAND: Robert Lenzner is the national editor for Forbes Magazine.
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