Negative Reaction To Wall Street Bankers Not Surprising: Morgan Stanley CEO

The negative image of Wall Street among Americans is not surprising considering the part it played in the financial meltdown of 2007-08, according to the chief of one of the world’s biggest financial services firm Morgan Stanley.

“It’s not surprising then the public and taxpayers will have a negative reaction to those who caused this to happen,” James Gorman, chief executive officer of Morgan Stanley said on Bloomberg’s ‘The David Rubenstein Show: Peer-to-Peer Conversations’. Renowned financier and philanthropist Rubenstein is co-founder and co-chief executive officer at The Carlyle Group.

The crash of the subprime mortgage market in 2007 in the U.S., developed into a full-blown banking crisis globally by 2008. This led to massive bailouts of financial institutions by the government using taxpayer money.

On why the image has not improved since then, Gorman said that Wall Street as a concept is not very attractive, and not something everyone can naturally gravitate towards.

Gorman explained that people are attracted to things that they can viscerally feel and touch, like new technologies, consumer services or entertainment. “The flow of capital is not one of those things”, he said.

This is because capitalists have failed to articulate how they take small, innovative companies – as Facebook, Apple and Google once were – and create capital to let them grow and turn into success stories, he added.

‘Dodd-Frank Repeal A Mistake’

Gorman also called the rollback of the Dodd-Frank Wall Street Reform and Consumer Protection Act by U.S. President Donald Trump as a mistake. He said that the Act is the reason why U.S. financial systems are in better shape than anywhere else in the world.

Among his earliest decisions as President, Trump had signed an executive order looking to repeal the Act, calling it "a disaster".

Gorman's real concern – if not Dodd-Frank, then what?