Criticism of Wall Street is one of the most prominent political topics during this election cycle. On both sides of the aisle, candidates are demonizing and scapegoating Wall Street.
Sen. Bernie Sanders has said fraud is the business model of Wall Street. Sen. Marco Rubio has spoken out about how banks have gotten "too big to fail." Gov. John Kasich said “they need a good ethics lesson on Wall Street.”
But these are all unfounded stereotypes meant to enrage Americans to the point of getting behind a cause which centers on hating a group of people many love to vilify — those with more money. In reality, most of our preconceived notions of Wall Street come from hating a few individuals who scammed everyone else out of billions of dollars — like Bernie Madoff, the guys at Enron and Jordan Belfort.
So what really constitutes Wall Street?
Nowadays, I’d say Wall Street isn’t so much a place as it is the entire financial system of the United States. So by this definition, Wall Street includes: community banks, financial advisors, asset managers, venture capital firms insurance companies, investment banks, government-sponsored enterprises like Fannie Mae and Freddie Mac and commercial banks.
But I’m willing to bet that most people view Wall Street more as a room full of overweight, balding, white men in suits, smoking cigars and talking about golf, with a pile of money stacked on top of their desks that they stole from retirement funds and tax evasions. And when an image like that comes to mind when thinking about someone, it's easy to hate them without even knowing them. But not everyone on Wall Street fits this description, contrary to what almost every presidential candidate would have you think.
The truth is, Wall Street does actually have a purpose and it does actually help people.
Let’s start with the most important: It provides liquidity — the ability to convert one asset, like cash, stocks or possessions, into another — to people and to businesses. Because of this liquidity, everyone in the U.S. is given the possibility of upward mobility — ever heard someone say they want their kids to have a better life than they did? Well, that stems from this principal. Without liquidity it would be virtually impossible to obtain a mortgage, take out a car loan or to go to college without a scholarship.
This liquidity also allows businesses to pool money together, which leads us to another benefit of Wall Street: helping small businesses. Not even the government-sponsored U.S. Small Business Administration offers loans to small businesses. But Wall Street will.
And what happens when these small businesses grow into large companies? Wall Street again offers capital, which these larger businesses then invest in resources and services which will benefit their customers — things like pharmaceutical drugs, cell phone innovations or autonomous cars.
Yet even with so many benefits arising from the financial sector, those vying for our votes preach the same old rhetoric over and over again. And it’s something along the lines of “Wall Street is evil, all they care about is money, they are crooks, only get bigger and bigger and have no regard for the public who entrusts them with their money.”
In fact, the only reason banks appear bigger now is due to the almost mandatory mergers the government urged large banks to make in order to stabilize the economy. But I understand that it is far easier for presidential hopefuls to garner support by crucifying Wall Street ad nauseam than it is to try to explain the realities of widely-hated financial institutions.
And so, the distrust of the financial sector is understandable: Rarely anything positive is ever portrayed about Wall Street or about the people who constitute it. But, just like every other group, religion, race, gender, public institution or private company, a few outliers should not be sufficient evidence to hate the entire faction.