What Would Thomas Jefferson Do?by Robert Sloan, Vanity Fair, April 21, 2009
S3 Partners Managing Partner Robert Sloan compares the Jefferson-Hamilton rift over Revolutionary War debt assumption and profiteering to the current uncertainties in the capital markets, and suggests a solution.
"It may have been controversial, but Hamilton's clear vision of the government's role in a financial imbroglio created the modern American capital markets. By contrast, in today's crisis, Washington's plans have been murky and rapidly changing—based partly on the government's reaction to the public's Jeffersonian distaste for speculation and its own unease about adopting a (albeit unpopular) Hamiltonian stance. But the ramifications of this ambiguity are making matters worse. We now face new rules for stock borrowing, changes in market-to-market accounting, and new taxes on
carried interests and T.A.R.P.-related bonuses. Even a ban on proprietary trading by T.A.R.P. recipients is receiving consideration. Unsure of the principles that govern the behavior of our financial institutions, the markets have lost confidence. And since investors don't know the rules for participation, cash balances in hedge funds and money-market funds have never been higher."
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