The closing bell

With last month’s forced departure of New York Stock Exchange chairman Richard Grasso, the last balloon of the 1990s stock market party has been popped.

Few companies or institutions did nearly as much as Grasso’s Big Board to promote the cult of stock ownership by individuals.

The ritualistic ringing of the opening bell, the stunts to celebrate new company listings, the sportslike play-by-play broadcast from the floor -- all became icons of the bubble. All were classic Grasso, playing the role of market shaman. He climbed into the ring for the listing of the World Wrestling Federation; for the Gateway listing, he led a cow onto the exchange floor. The cow was well taken care of; it was the average investor who was led to the slaughter.

Grasso’s fall is a tale overflowing with irony. He preached the importance of the public trust but treated the exchange as a private trough. He did nothing illegal; he simply got paid far, far too much by people who should have known better. And although he fell victim to the current clamor for transparency -- had no one learned of his pay package, he would undoubtedly still be in power -- no one did more than Grasso to air out the musty inner sanctums of the NYSE. The motive, to be sure, was marketing, which is where his genius lay. The final irony, of course, is that the man who has come in on an interim basis to save the exchange, John Reed, was nearly run out of his corner suite in the early 1990s by banking regulators worried about Citicorp’s problem loans.

It’s no excuse, but it’s worth remembering that in 1999, when Grasso negotiated his pay, the entire investment world was deranged, seized with millenarial fever: The Internet was going to change everything, Grasso believed. The NYSE was all about data, a technology company in disguise, he said, even as he vowed to take it public.

Perhaps his evangelism inspired NYSE board members. But given that he was their regulator, they should not have been in a position to set his pay. Still, suggestions that Wall Street CEOs shouldn’t sit on the NYSE board make no sense, either: They are exchange members with legitimate interests in its management. Better that the regulatory function should be hived off, and with it, perhaps, some of the sanction it has given the exchange to wrap itself in the flag of public service, while rejecting constructive criticism and calls for change.

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