Taming the Street

April 1, 2023

A Polk Award--winning, Pulitzer Prize finalist who reports for the New York Times, Henriques (The Wizard of Lies) reconstructs President Franklin Roosevelt's efforts to regulate Wall Street during the Great Depression, seeking to temper market excesses, irresponsible speculation, and the weighty consequences of boom-and-bust cycles. Lessons for the present. Prepub Alert.

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July 3, 2023
The campaign to clean up the Wall Street chicanery that brought on the Great Depression receives high praise in this surprisingly colorful history of New Deal financial regulation. Journalist Henriques (The Wizard of Lies) details the fraudulent practices that precipitated the 1929 crash, including banks knowingly selling investors worthless bonds and investors conspiring to create artificial stock market rallies during which they sold shares at marked up rates. The Roosevelt administration responded by creating the Securities and Exchange Commission, which was tasked with regulating over-the-counter stocks, utility holding companies, and the New York Stock Exchange. The narrative centers on four figures: Joseph P. Kennedy, the flamboyant financier and first SEC chairman; William O. Douglas, the hard-charging Yale law professor who succeeded Kennedy as SEC chair; Richard Whitney, who as NYSE president resisted SEC oversight until he was caught embezzling customers’ assets in 1938; and Franklin D. Roosevelt himself, a shrewd idealist who, according to Henriques’s hagiographic portrait, made capitalism work for the average person. Henriques makes the potentially dry subject of SEC regulation fascinating, and the vivid prose evokes the dynamic personalities involved (“Douglas abruptly stood up from his deck, punched the air with his fist, and forcefully answered: ‘Hooey!’ ”). It’s a skillful account of a pivotal era in America’s economic history.

August 1, 2023
A history of the difficult work of wrestling Wall Street into regulatory compliance over the course of Franklin Roosevelt's presidency. It was among the greatest accomplishments of Roosevelt's New Deal that agencies such as the Securities and Exchange Commission succeeded in "clearing out the vicious jungle that was the nation's financial landscape in the 1920s and replacing it with a well-tended terrain where ordinary Americans could save and invest with confidence," writes Henriques, a George Polk Award winner and the author of The Wizard of Lies and A First-Class Catastrophe. Before the SEC came along, Wall Street was an arena for insider trading and self-dealing, where private investors mostly worked at a large scale and smallholders in the financial arena were frequently victimized by those larger players. While serving as New York's governor, Roosevelt made tentative steps to regulate the financial industry, and he rejected Robert Moses for the role of czar. It was Roosevelt's lieutenant governor, a scion of the Lehman dynasty, who put Moses in the job, and Moses successfully articulated "the folly of trusting bankers to police themselves." Even after the SEC was established, Henriques observes, the financial markets were occasionally roiled by downturns, though honest ones that largely reflected the business cycle rather than the vast Ponzi scheme that manifested itself in the meltdown of the first years of the Great Depression. Some of the practices that the SEC attempted to curb are back in full force, including short selling. Even if the Chicago School acolytes urge that the government has no business in the marketplace, the "rich man's panics" of old are fewer than before, with a scaffolding of "safeguards against market rigging" in place--at least for the moment. Defenders of regulatory watchfulness will find much ammunition for argument in this readable history.

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