Vox Populi

Yesterday, the Paulson bailout bill was voted down in the House of Representatives. Apparently, Henry Paulson had thought that dealing with Congress was like dealing with the partners at Goldman Sachs.

Apart from that, the bill got drowned in partisan rancor, largely because each side wanted to control the narrative of what went wrong.

But the larger reason was simply that the American people rose up and shouted: No bailout for Wall Street.

Given the choice between systemic financial collapse and the hides of Wall Street's masters, the populace decided that anything would be better than giving Wall Street a reprieve. In the eyes of the public, the financial community deserves humiliation. Nothing less.

Surely, Wall Street is not entirely at fault. Many people on the Street will tell you that the problem began with an act of Congress, the 1995 Community Reinvestment Act, that forced banks to write mortgages for people who did not quality for them. If they did not comply they could lose their charter. These were sub-prime mortgages. Lawyers and community organizers stoked the flames of the sub-prime fire.

It did not matter that much whether the mortgages were going to be paid off-- especially after the interest rates were adjusted-- because the banks were not holding on to them. They were selling them to Fannie Mae, which was on a sub-prime mortgage buying spree.

After Fannie Mae bought the mortgages, it repackaged them and magically transformed them into investment grade securities. Ratings agencies and investment bankers colluded, because, after all, if they said they were AAA then they must be AAA.

Efforts to regulate Fannie Mae were scuttled by the same Congressional leaders who are today blaming the debacle on free market capitalism.

So, Congress forced banks to write sub-prime mortgages. Wall Street simply gamed the system. But it did not just accumulate obscene profits; it also flaunted its success. Ironically, the nation's leading capitalists became the most visible beneficiaries of an anti-free market policy.

Of course, it was a Ponzi scheme and it did collapse, damaging the masters of the universe. It damaged their careers, their reputations, their status, and their portfolios.

Many did not have the means to deal with the damage. Those who had followed the counsel of therapists or the nostrums offered by the therapy culture were especially at a loss.

Therapy had told them to ignore what other people thought of them and to generate their own self-esteem. The result: these masters of the universe had no idea how they looked to people who were on the outside.

And then, one day, they looked up and noticed that the nation had risen up en masse to say that it would bear any burden, suffer any loss, even undermine the world financial system... if only it would cause the masters of Wall Street some serious pain.

What were the people saying? They were making an ethical point. Or better, a point about the absence of elementary ethics on Wall Street.

The problem was: it is one thing to amass a great fortune; quite another to earn it. And it is one thing to feel good about yourself; quite another to earn the respect of others.

You can tell when someone respects what he has earned, and, by extension, if he respects his labor he probably respects himself. Someone who has earned what he has spends it judiciously, does not flaunt it, does not waste it on trifles, and does not throw it in the face of those less fortunate.

If you have money you have not earned, if there is no correlation between what your work and your wealth, you will start to function like a dimwitted celebrity. You will believe that one day you will be found out as a fraud, and that someone will take it away from you. Thus, the compulsion to spend.

Profligate spending does not make you look good to those who have more modest means. They know that when someone who is wealthy flaunts it, he is building up his self-esteem at someone else's expense.

The masters of Wall Street knew how to make lots of money, but they lacked humility and benevolence.

They did not have enough humility to believe that participating in a market entails an ethical obligation, not to your raw self-interest, but to the orderly functioning of the markets. Your self-interest comes second.

Those who have missed this point are often humbled by the markets.

And these masters lacked benevolence, even as they gave fortunes to charity. Benevolence is not just generosity, and it goes beyond giving money to those who are neediest.

Benevolence involves being kind, considerate, and respectful to others. It is about how you talk to the dry cleaner or the waiter in the restaurant. However important you are on the Street you owe your fellow citizens gestures of respect. Most of them do not want your charity anyway.