5 Main Street Myths About Wall Street


NEW YORK (TheStreet) -- There are lots of myths out there about Wall Street folk, so we're setting the record straight. After all, if you're going to hate the hot shots at Goldman Sachs, you should at least get your facts straight.

Myth 1: Wall Street Preys on the Innocent

The debt difficulties of Greece provide a recent example of how this perception isn't quite right. Goldman Sachs and JPMorgan Chase have gotten lots of bad press for working with the Greek government to help it mask its debts, and now the Greek economy is in deep trouble.

But these debt-masking efforts by Greek politicians were fairly minor in the grand scheme of things. Greece's debt levels were too high even if you erase the debts they hid with the help of Wall Street financial wizardry. There is also the fact that Greek politicians hired Goldman to help it mask its debts. If they were innocent, they wouldn't have done that.

Similarly, the loose lending standards that enabled people to buy homes they couldn't afford during the housing boom were not the sole fault of the bankers. For a story called "The Giant Pool of Money," which aired in May 2008, the public radio program "This American Life" found a guy named Clarence Nathan who took out a loan called a NINA, which stands for No Income, No Asset. This enabled Nathan, who earned $45,000 annually, to borrow $540,000 against his house.

"I wouldn't have loaned me the money," Nathan told his interviewer, Alex Blumberg.

Nathan may have been honest, but he was far from innocent.

Myth 2: Wall Street Executives Are Greedy

This is a myth? People on Wall Street not greedy? Even old Wall Street hands would seem to admit they are when they use that old saw about how the markets shift between fear and greed. One of Berkshire Hathaway Chairman Warren Buffett's most important pieces of advice to investors is that they be greedy when others are fearful and fearful when others are greedy.

But ego seems to be a bigger factor than greed in many instances. When The Blackstone Group co- founder and CEO Steve Schwarzman wanted to take his company public, he explained to his family that they would make bundles of money but be subjected to more public scrutiny, according to a 2007 article in The Wall Street Journal .

When one member of the family asked Schwarzman, "Do we need any more money?" Schwarzman's mother Arline interrupted him to say "You don't understand what drives him. Money is the measuring stick," Arline Schwarzman told the newspaper.

Want to read the other myths? Visit TheStreet.com

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