What will the midterm elections mean for Wall Street?
We asked Muriel "Mickey" Siebert, the "Grande Dame" of Wall Street who founded the discount brokerage Muriel Siebert and Company and became the first woman in the world to become a billionaire without inheriting most of the money. Mickey wasted no time in our conversation to express her fears of the competitive disadvantage our financial system could face if a global financial reform plan is not created.
MS: When we really started having problems, I said we needed to have the top three or four people from our country go make rounds around the world to the major centers and tell them why the United States was putting in place the specific reforms we were doing and while they should follow suit.We need regulations that work, not regulations that are complicated.
There is still a lot of work to be done in Congress when it comes to financial reform and I think we have to see what they really pass to assess how it impacts the financial industry. I think we need international regulations as far as margins are concerned. We need transparency when it comes to derivatives.
The Over The Counter swaps are a major market and we need transparency. We need transparency not while the trade is going on but after the trade is done in the dark pools because it is not fair to the individual investors and the institutions who own the stocks. This information should be provided either at certain hours or at least once a day but once day allows you to do lots of trades without noticing the dark pools.
If there are large blocks of IBM or Intel that trade, shouldn't we know that at a certain point? There should be a transparency in those dark pools.
LL: The black box has got to go.
MS: Exactly, the black box has got to go. We have to know what's being printed and what's being traded. Its not fair to the companies, its not fair to the possible stockholders. I think some of the flash trading is taking advantage of things. We don't need a system that takes advantage. We need a system that promotes transparency and decency. Its too important. Light needs to be shed on the dark pools.
LL: Its kind of sad we're how many years out of the fall of the financial system and we are still talking about the need for transparency.
MS: I know that. When I was superintendent of banks I saw first hand when they started with simple derivatives that government could not keep up. I realized at that time it was hard for regulation to keep up with the changes in technology.
LL: Do you think the CFTC is equipped to tackle the issue of transparency?
MS: I think that is one of the reasons why I want to see international regulation put in place.We need fair regulation and transparency in the world markets. I think that is one of the reasons why individuals have pulled out of this market. You've got global trading. The markets have changed dramatically. I'm not saying for the better or for the worse. I'm just saying they have changed for the profitability for the firms which is different than taking care of the public. I'm a strong believer the capital raising system has been partially responsible for the success of this country.
LL: If global regulation is not done, will this drive jobs overseas?
MS: It can drive jobs overseas. It can drive trading overseas. You could put together the trades here and print them overseas using their margin requirements and using their laws. I wished instead of having this partisan hatred we would get together and say what do we have to do to make sure that everything is fair for the U.S. financial system to compete? The regulations need to be fair and not put US companies at a disadvantage.
LL: We've got the midterms coming and when I talk to my contacts like Raghuram Rajan, they say we need more people in the middle rather than the extremes so we get the compromise to get things done.
MS: That's exactly correct. You've got to sit down on a bipartisan basis and think what's in the best interest of the country and the world system instead of this hatred that is going on. I am disgusted with it. I was lucky when I was Superintendent of Banks for the State of New York I had corporations with both the Democrats and Republicans in Washington. We don't have that now.
LL: Back then they had the political will to help you. Do you think Congress has the political will now?
MS: I think if we started to get a lot of complaints after the midterm elections they might. Right now we have what I like to call the political garbage can going on. I think after the election is over I think they should get together on a bipartisan basis and say OK what do we have to do to make sure the markets are fair. The public has told us with their actions- by not doing anything in regards to trading. We have accounts that were active and are not trading now. They are just sitting there.
LL: What happen to running on substance?
MS: No one is talking substance. Congress needs to figure out how to produce jobs for Americans who are not working. Sending checks out to people does not get people to work.
Why can't these people in Congress look at how many jobs came out of Bill Gates' mind? Why can't they get beyond the hatred of big business and of the party sitting across the aisle? Why can't they recognize that someone like Gates would have the next break through in technology and make sure we were supporting it?
I happen to believe once the election is over people will sit down and analyze the opportunities. This elections is horrendous when it comes to the hatred we are seeing. That has to change.
LL: How would you characterize the economy right now?
MS: If you go to Detroit and the Midwest even though we have had this deal in the auto industry there are no jobs there. If you go to other parts of the country there are jobs. The Midwest is hurting. Our business is soft because people don't trust the integrity of the system. But they are not taking their money out. They are just not doing anything with it. I believe we are starting to see a certain bounce back because a lot of inventory has been used up or its in the process of being used and inventory needs to be rebuilt. I don't see the economy booming ahead.
LL: Should the Fed do QE2?
MS: The Fed should do what they think is right and they should publicize why they think its right. The one thing I can say about the Fed and what they have done is they didn't wait six months to do something the first time. They just did it. I congratulate them for acting fast because there were serious problems. Maybe they could have done other things but they had shown a willingness to act. I have seen too many people who didn't.
LL: Wall Street bonuses are making headlines again. What do you think of the complaints?
MS: I think people are upset because there are so many people without jobs. These individuals are earning the money. They are not stealing it.
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."