“I consider my job as more like that of a trustee,” Amica chief executive Robert DiMuccio told me last week. “I was handed a franchise and a pool of capital that has grown steadily for 104 years, and my job is to pass it on to the next generation of customers in better shape than when I took it over.”
Here’s the point: If we don’t like the rip-out-your-eyeball culture of Wall Street, if we’re tired of the inherent conflicts of interest, if we don’t want to encourage the excessive leverage and risk taking and executive compensation, we can take our money elsewhere — to companies that deliver as good or better products and services at the same or lower prices. Forget about occupying Wall Street — why not just defund it?
Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.
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It would surely help such a grass-root movement get off the ground if existing mutual companies would begin to market themselves more aggressively and explicitly as the Wall Street alternative. They could also use some of their accumulated capital to band together to launch cooperatively owned pension funds, mutual funds and private-equity funds to serve themselves and their customers, in effect creating an alternative financial universe with different values and a different culture.
That would not only be beneficial to the mutuals and their owner-customers — it would be good for the entire financial system. The experience from other industries is that a shift of as little as 10 percent of market share would be enough of a competitive threat to prompt the big financial institutions to offer their own “organic” products, if you take my supermarket metaphor. After that, the process can become rather infectious, changing the way the financial services companies present themselves to the market, keep score and set strategy. Instead of a race to the bottom, like we had during the boom years, you’d get a race to the top.
Conservatives like to say there’s nothing wrong with markets that can’t be fixed by more open competition. When it comes to financial markets, Lord knows we’ve tried regulation — Glass-Steagall in the ’30s, Garn-St. Germain in the ’80s, Gramm-Leach-Bliley in the ’90s, Sarbanes-Oxley in the ’00s and now Dodd-Frank. But given the political power of Wall Street, maybe it’s time to acknowledge that a regulatory-only approach can take you only so far.
Let’s take a page from the Progressive era and let competitive discipline pick up from there.