Some will argue that limiting financial institution leverage will render these businesses less profitable and less competitive with non-U.S. companies. HCM’s response is – “so what?” Perhaps less profitable investment banks will result in more of America’s talented students becoming scientists, engineers, doctors and teachers instead of investment bankers and mortgage traders. What would be so terrible about that?
~Michael E. Lewitt, Managing Member and President of Hegemony Capital Management, writing in the subscription-only Welling@Weeden newsletter for the clients of Weeden & Co. LP. This excerpt of the article, which is not reproduced with permission but contains no advice or information that could be considered proprietary, is a long list of suggested regulations which Lewitt believes are needed in today’s financial markets.
The events which are taking place in today’s financial markets are bewildering to the uninitiated, and are only slightly less scary to those who are familiar with the concepts and terminology inherent to this world. But it strikes me as significant to see so many people within the world of finance calling for drastic reform and desperately trying to demonstrate that the problems which are blooming now are the spawn of seeds planted in previous years and decades. And one thing that a few such as Lewitt are saying is that perhaps it simply is unwise for us to pursue the sort of gains which have fueled Wall Street for the last quarter-century.