“Wall Street has a dream: that the Federal Reserve will rescue financial markets with a sharp cut in interest rates.”

That is the opening line in the article, Fed Treads Moral Hazard, published by the Wall Street Journal today -learned of this via The Big Picture.

I am sorry but I don’t want the Fed to cut rates just to bail out Wall Street. I support lower rates and I support tax cuts as I believe that they stimulate the economy, however, this may not be the time to cut interest rates. The article goes on to say:

“Behind that dream lurks a problem, something financial people call moral hazard.

Moral hazard is an old economic concept with its roots in the insurance business. The idea goes like this: If you protect someone too well against an unwanted outcome, that person may behave recklessly. Someone who buys extensive liability insurance for his car may drive too fast because he feels financially protected.”

“Earlier in his term as Fed chairman, Ben Bernanke was seen by a lot of investors as possibly too inclined to bail people out. Mr. Bernanke was dubbed “Helicopter Ben” because of a reference he once made to an economic theory that, if deflation threatens, the Fed’s role is to dump money into the economy as if dropping it from a helicopter.”

Investor’s Business Daily published an editorial in today’s edition titled, Bank On The Fed, which calls for the Fed to cut interest rates immediately and claims that the Fed is not doing enough.

They list statistics from Lehman Brothers which shows that the Fed injected an average of $62 billion per day into the market after September 11 (12th -17th). They injected an average of $18 billion per day last week with a jump to $31 billion on Thursday and Friday.

The editorial goes on to say:

“We don’t believe either the Fed or Congress should “bail out” those who made bad loans. More than 60 lenders have already gone bust, and more likely will. That’s bitter medicine. Even so, that’s not the same as saying the Fed should let the rising portfolios of bad subprime loans turn into a system wide financial panic.”

“Fast action will stave off trouble later. And let’s look honestly at what’s happening. As President Bush noted, the economy remains basically solid — just as it did in 1998 during the LTCM crisis.”

“The worse that could happen right now is for the Fed to do too little, and Congress to do too much. There’ll be plenty of time to fix what’s wrong later. Right now, it’s time for action, Mr. Bernanke.”

– please see today’s edition of Investor’s Business Daily for the complete editorial

Which article do you agree with?
Let’s hear your thoughts on the matter; leave a comment and we can start to discuss and debate!

image via WSJ!

I was IM’ing my friend last week, a childhood buddy since I was six years old and we got to talking about an article he read in a magazine and asked me if I would write a post about it during Black History month. How could I say no because I think it is an excellent idea. Reggie (he won’t let me post his last name) is a young investment banker on Wall Street, an African American that understands the struggles endured of those before him to make it big on the largest stage.

We lived in the same complex when I was young but then lost touch when our parents moved to different towns during high school. He was one of my best friends and although we were children, we always talked about growing up and becoming rich while playing stick ball in the parking lot. We wanted to be baseball players, not Wall Street players! If it were not for the internet and e-mail, I probably wouldn’t keep in touch and that would be a shame. We have grown apart during our adult years but we will never forget where we came from and I feel honored to write this post for Reggie and all African Americans during this celebrated month.

I won’t take credit for any of the research or information below as it belongs entirely to Black Enterprise Magazine and the writers that compiled the list:
Carolyn M. Brown
Additional reporting by Denise Campbell, Hyacinth B. Carbon, Sonya A. Donaldson, Alan Hughes & Tennille M. Robinson

October Edition, 2006
Page 136 – 10,970 words

Headline: 75 Most Powerful Blacks on Wall Street
Highlight: Whether they’re in investment banking, sales and trading, asset management, or private equity, these power players move the financial markets

Brief Synopsis directly from the Article:

“THEY’RE WALL STREET’S BILLION-dollar players. Some raise capital to build or improve schools, hospitals, airports, and railroads from Los Angeles to London. Others have been responsible for financing the next generation of entrepreneurs and the products that will change the way we live, work, and play.

Whether they are engaged in investment banking, sales and trading, asset management, or private equity, those who wield power on Wall Street know that success is about more than negotiating money-making deals–it’s also about brokering relationships. “So much revolves around opportunities to bring in business,” says John W. Rogers Jr., chairman and CEO of Ariel Capital Management L.L.C. (No. 2 on the BE ASSET MANAGERS list with $19.3 billion in assets under management). Bottom line: being a power player means having the right connections.

In Ariel’s case, it’s also about branding–an art that Rogers and President Mellody Hobson have mastered. Once one sees the company’s logo–the turtle–you instantly know Ariel’s reputation for steady returns and profitability. The dynamic duo made the cut among the most powerful African Americans on Wall Street not only because of their negotiation, money management, and relationship-building prowess but, like the turtle, their longevity at the top.

BLACK ENTERPRISE’s listing is a compilation of the best and brightest investment bankers, traders, asset managers, CEOs, and venture capitalists. Some physically operate on Wall Street while others ply their trade in cities across the globe. Pick a spot on the map–Chicago, San Francisco, London–and you’ll find one of our 75 power brokers in action.

Roughly 30 are top-tier professionals at financial behemoths. Another 33 are entrepreneurs who head the largest black-owned investment banks, asset management companies, and private equity firms. Whether they are heading major departments, managing core businesses, or running their own firms, these executives all have an impact on their companies’ bottom lines.

Our team of editors and reporters spent six months engaged in extensive research to identify the financial elite. This year’s roster outnumbers previous lists, growing to 75 members. One reason: the growth of private equity, the sector in which 18 of the power hitters operate.

Fourteen individuals who appeared on our 2002 list did not make the cut this time around. Some, such as C. Kim Goodwin, former chief investment officer at State Street Research & Management Co., retired from the industry. Some moved into different industries: For instance, top analyst Charles Phillips Jr. assumed the role of co-president and director of tech giant Oracle Corp.

The list includes seven professionals who have appeared on all three of our previous lists: They include Citigroup’s James F. Haddon, Bear Stearns’ William H. Hayden, Citigroup’s Raymond J. McGuire, Lazard’s William M. Lewis Jr., Merrill Lynch’s E. Stanley O’Neal, Utendahl Capital Partners’ John O. Utendahl, and Morgan Stanley’s George L. Van Amson.

Over the years there have been radical changes in the gender composition. In 1992 and 1996, only two women made our list–one of whom was William Blair principal Michelle L. Collins. In 2002, six women made our roster. This year’s listing features 11 women, including Collins, who resurfaced as co-founder of the private equity firm Svoboda, Collins L.L.C., and newcomer Amy Ellis-Simon, head of multiproduct sales for Merrill Lynch. She appeared on our “Up and Coming African Americans on Wall Street” list in 2002.

The pool of talent is impressive. Unfortunately the number of African American financial managers remains relatively small, and allegations of racism are still leveled at major firms. Despite being run by an African American, Merrill Lynch is being sued by 70 former and current employees who charge that it engages in discriminatory hiring and promotion practices. “African American movement within the industry has seen slow and steady progress, with incremental increases in minority recruitment,” says P. Michelle Holton, manager of inclusion at Edward Jones and chairwoman of the Securities Industry Association’s Diversity Committee. She concedes movement within the pipeline into senior management has remained inert. According to the U.S. Equal Employment Opportunity Commission, representation of African American officials and managers is the highest in the areas of banking/credit, at 7.0%, and the lowest in the securities industry, at 4.4%.

Those numbers speak volumes. Wall Street is still viewed a club steeped in exclusivity–a bastion of white male privilege. But Rogers says it’s not so much that African Americans are intentionally being kept out of the industry, but that “when deals are being cut we just aren’t even thought about.”

However, the impact of our 75 power players on the financial markets–and the world–has not gone unnoticed.”

I will now give ten names from the article and won’t list them all because that is proprietary research. I have decided to only list Investment Bankers, including one man that leads the same company that Reggie works for.

INVESTMENT BANKING
Gilbert E. Ahye, SVP, Business Development and Mergers & Acquisitions, American Express Co., New York, NY, Age: 59
Bottom Line: Ahye is a key adviser to the American Express Global Leadership Team, developing new international business partnerships and executing mergers and acquisitions. Since assuming his current role three years ago, Ahye successfully led the acquisition of Threadneedle, a U.K.-based asset management company, which was recognized by Institutional Investor as the Asset Manager Deal of the Year for 2003. He also led AMEX’s efforts to dispose of several high-profile businesses, including the sale of the company’s ATM business to 7-Eleven in 2003 and the tax-free spin-off of Ameriprise Financial to shareholders in 2005.

INVESTMENT BANKING
Shawn D. Baldwin, Chairman & CEO, Capital Management Group, Chicago, IL, Age: 40
Bottom Line: Baldwin is a Wall Street fast- tracker who has built his asset management and investment banking firm one acquisition at a time. The first possession was MuniDirect, an Atlanta-based domestic broker-dealer. Next, he acquired KCM Capital Management, an Anguilla-based off-shore broker-dealer. A BE 100s company, CMG has been involved in the General Electric spinoff of GenWorth Financial and Google’s IPO. Baldwin has participated in more than 72 transactions totaling more than $63 billion in value.

INVESTMENT BANKING
Bernard Beal, CEO, M.R. Beal & Co., New York, NY, Age: 51
Bottom Line: Beal is at the helm of the sixth-largest black-owned investment bank with more than $42 billion in managed issues for 2005. Since its inception in 1988, M.R. Beal has grown to 45 professionals based in offices throughout New York; Sacramento, California; Chicago; Dallas; and Atlanta. Beal leads a team that has participated in $29.9 billion of municipal bond underwritings in 2005 and continues to rank among the top 20 underwriters of municipal securities worldwide.

INVESTMENT BANKING
Ronald E. Blaylock, Chairman & CEO, Blaylock & Co., New York, NY, Age: 46
Bottom Line: Blaylock’s firm holds the No. 3 spot on the BE INVESTMENT BANKS list with $82.7 billion in total managed issues. The one time Georgetown University hoops star garnered an industry wide reputation in 1996 when the company became the first minority owned firm to lead a corporate bond underwriting. Blaylock continues to make some eye catching moves. In 2005, the firm served as a lead manager on a $1.6 billion bond financing for General Electric and its equity capital markets business and as a co-manager on Google’s $4 billion secondary offering.

INVESTMENT BANKING
Napolean Brandford III, Chairman & Founding Partner, Siebert Brandford Shank & Co. L.L.C., New York, NY, Age: 54
Bottom Line: With 25 years of experience under his belt, Brandford is a seasoned public finance veteran. The founding partner manages the Texas and Western regions of SBS. Brandford maintains an active client list that includes many city and state agencies nationwide. An astute financial strategist, he competes against giant firms. Such power moves have worked well in building SBS and helped it seize the No. 4 spot on the BE INVESTMENT BANKS list with $50.6 billion in total managed issues.

INVESTMENT BANKING
Lloyd Campbell, Managing Director, Rothschild Inc., New York, NY, Age: 48
Bottom Line: This son of a Tuskegee Airman is flying high. Not only does Campbell chair the Compensation and Promotion Committee for the North America division, he raises institutional capital for Five Arrows, the firm’s merchant banking arm. Outside of Wall Street, Campbell is making an impact as chairman and founder of Pride First Corp., a nonprofit organization committed to improving education among New York City youth.

INVESTMENT BANKING
Moctar A. Fall, Managing Director & Head of Debt Capital Market for Emerging Markets, JPMorgan Emerging Markets, New York, NY, Age: 46
Bottom Line: A world class financier, Fall heads the Capital Markets Group, which is responsible for the origination of debt for issuers in Asia, Latin America, Eastern Europe, the Middle East, and Africa. His group also manages the Emerging Markets Debt Capital team in New York. Notable career moves: Fall headed the team that led the first Deutschmark Global Bond for the World Bank and headed a team that led the $4 billion. 30-year Brady exchange for Venezuela.

INVESTMENT BANKING
Gregg Gonsalves, Partner & Managing Director, Industrial Group, Goldman Sachs & Co., New York, NY, Age: 38
Bottom Line: Several high profile mergers and acquisitions helped launch Gonsalves into a partnership position at Wall Street powerhouse Goldman Sachs in 2004. He has continued to impress with his prowess at structuring billion dollar transactions in the high stakes arenas of aerospace, defense, and technology. Most recently, he advised Boeing on the $1 billion sale of its Wichita parts manufacturing facility (Spirit AeroSystems) to Onex Corp. Gonsalves has been involved in mergers and acquisitions activity in industries ranging from automobile manufacturing to paper and forest products.

INVESTMENT BANKING
James F. Haddon, Managing Director, Infrastructure Finance Group Municipal Securities, Citigroup, New York, NY, Age: 52
Bottom Line: During his 25-year tenure in the municipal finance industry at Citigroup and PaineWebber (now known as UBS), Haddon has served as senior book running manager for various municipal issues totaling in excess of $40 billion. He has been instrumental in structuring project financing to provide funds for convention centers, stadiums, transportation projects, and general municipal projects throughout the cities of New York; Detroit; Washington, D.C.; and more. Notable accomplishments include the $709 million tobacco securitization for New York City and the $515 million securitization of rum tax revenues for the U.S. Virgin Islands.

INVESTMENT BANKING
William H. Hayden, Senior Managing Director, Bear, Stearns & Co. Inc., New York, NY, Age: 65
“I’m a Yankees fan,” says Hayden, with a heavy Boston accent that would suggest an affinity for the Bronx Bombers’ archrivals. “Because when I grew up in Boston, we were Brooklyn Dodger fans and the Red Sox had no blacks and no Hispanics and the black kids had nobody to root for.”

Hayden, who grew up about an hour outside of Boston in New Bedford, Massachusetts, has long been an advocate for diversity. Starting out on Wall Street in the early 1970s, there were virtually no other African Americans in investment banking. But a combination of smarts and know how helped him rise up the ranks. While he secured loads of business because of his acumen, he also got a little help here and there. In 1977, he was named senior banker of a $305 million offering used to finance construction of what is now Hartsfield/Jackson Airport in Atlanta after then mayor Maynard Jackson insisted that black bankers be part of the city’s bond offerings.

At 65, he’s long been a mainstay on Wall Street. After all, he’s helped fund billions of dollars in construction projects over his 30-plus year career. As senior managing director for Bear, Stearns & Co., Hayden oversees and develops ways of financing large government projects. His career highlights include developing financing strategies to construct the U.S. Open Stadium in New York and the Atlanta Hawks’ arena for Time Warner Turner Broadcasting.

While those were high profile transactions, it’s not as well known that the 1962 graduate of the University of Massachusetts Dartmouth is an avid African art collector. “I arrived here in New York almost 30 years ago. A friend, Eric Robertson, quit being a lawyer and went to Africa and brought back some art that I bought from him,” Hayden recalls. “And over the years he became one of the most well known black African art dealers in the world.”

Hayden is no slouch in the art world either. In fact, he’s had his works displayed in museums such as the Metropolitan Museum of Art and the Guggenheim. When he auctioned off roughly half of his 70 pieces, it was the first time an African American’s art collection was sold at the prestigious Sotheby’s. Much of his collection hails from the Yoruba people of West Africa.
-Alan Hughes

Selection criteria for the most powerful African Americans on Wall Street
* Those chosen are investment bankers, traders, asset managers, venture capitalists, or top executives with management responsibilities over these areas.
* They are responsible for the companys’ bottom line and execute transactions on a national or global scale.
* They have achieved the status of chief executive, president, partner, managing director, or other top ranking position at their firms and have significant management duties.
* They demonstrate significant influence within their company and throughout their industry.
* Entrepreneurs who own their own firms must operate investment banks that have managed more than $10 billion in total issues, asset management firms with at least $2 billion under management, private equity firms with at least $100 million in capital commitments, or perform as a leading firm that engages in unique or complex transactions.
* Candidates must work for a U.S. based company or the U.S. operations of a foreign based company.
* Candidates must have at least 10 years of experience in the financial services industry.

To see the entire results of the article, please visit Black Enterprise magazine!