Has Wall Street changed? Will legislators in Washington impose modesty and restraint on an industry notorious for possessing neither? Can they banish greed from a system that just more than a year ago brought the global financial system to the brink of collapse?Certainly the nation’s top investment banks, at least those that remain, have shifted down to suit the risk-aversion trend. No longer are traders loading up on synthetic derivatives and cluttering their balance sheets with unknowable levels of debt. With the help of record-low interest rates, investment-grade corporations are deleveraging by raising cash to pay off bank loans. Just in time for the holidays, corporate heads are engaging in their own secular acts of contrition. Over the past three weeks, Goldman Sachs and General Electric have expressed regret for feeding a speculative pyre that became an inferno. There is a sense among the more thoughtful of Wall Street princelings that it is better to work with Congress than to oppose it openly. On any given day, the Acela Express, the elite rail service that links Washington and New York, is filled with corporate executives eager to make their case against the kind of reform some liberal legislators are demanding. But beyond that there is an implied culture of invulnerability on Wall Street, a knowing sense that populist politicians, like military generals busily planning for the last war, are looking backward while financiers incubate The Next Big Thing that will reshape the world. Washington is reactive, say corporate execs. It responds to a financial crisis with a new set of purpose-built regulations, despite the fact that asset bubbles are as distinct from one another as snowflakes. In contrast, the Street – which has, by the way, migrated from its original home in Manhattan’s gritty downtown section to glamorous midtown, alongside the top-flight boutiques and cafes of Rockefeller Centre – is innovative, bold and visionary. Like the scientists who split the atom, traders are not about to give up on their more exotic confections just because they are capable of great destruction. After all, junk bonds were once rogue products and became respectable in time. Besides, say the finance lords, market meltdowns are incidental to the Street’s capacity for community enrichment. A generation ago, the interest rate on a US$100 million (Dh367.2m) bond issue to build, say, a municipal water and sewage system was a whopping 3.5 per cent. Today, thanks to financial innovations such as interest rates swaps, which allow issuers to lock in spreads at a fixed rate, the interest on such a transaction would be a mere $500,000 or so. And now Congress, in its primitivism, would introduce “reforms” that would deprive local government of such efficiency. Or take year-end bonuses, which last year averaged $13.8m among the top 100 executives in the US. Excessive? Not so much, the Street reminds us, when you consider that the chief executive of a top investment bank routinely works 18 hours a day, every day, to keep his institution afloat in an age where huge trades, conducted in micro-seconds, can turn entire markets upside down. The average longevity of a Morgan Stanley partner, it turns out, is only four years and 10 months. With an attrition rate like that, why should a managing director strategise for the long term when his knees are likely to give out in just a few years? Why not grasp for the big carrot on a short stick and squeeze what you can out of every trade and underwriting deal? And the controversy over ratings agencies? Certainly – begins a rare Street mea culpa, followed by a world-weary appeal to reason – there are conflicts of interest when firms like Moody’s Investors Service and Standard & Poor’s are remunerated by the very companies they are appraising. But by all accounts, the process is transparent. Prospective investors have only to search the internet to learn the agencies’ methodology. Besides, what is the alternative? Congressional oversight, as has been suggested in Washington? Intervention by the very deliberative body that is incapable of funding itself without generous assistance from the People’s Republic of China? Are politicians prepared to assign investment grades to companies and then take responsibility when those decisions prove to be ill-advised, even disastrous? What distinguishes Wall Street from Washington is not virtue, an attribute sorely lacking in both power centres, but candour. In the 1980s, investment bankers referred to themselves as the Masters of the Universe. In fact, they are more like the mythological gods of ancient Greece, all-powerful and yet blemished by the human characteristics of avarice and arrogance. Like Zeus and Aphrodite, the Goldmans and GEs seduce mortals, and they occasionally pay a price for their conceit. Just as the Greeks saw in the gods they created their own qualities, both inspirational and loathsome, the deities of Wall Street represent an ideal we embrace in prosperity only to demonise in penury. [gallery]However fashionable it is to bash the lords of finance, they know that when the cycle finally turns, they will once again be celebrated as heroes. They also understand that this is one claim their counterparts in Washington, gridlocked as they are by petty parochialism and stratospheric indebtedness, can never make.