The moral decline of Wall Street.

Do Wall Street banks have an obligation to society? Not according to the Wall Street banks. Their only functions are to create and sell financial products and to make as large a profit as possible for their shareholders and executives.

That's the lesson that Michael Hirsh has taken away from the Senate hearings on Wall Street yesterday. In hindsight is seems obviously true.

Here's the problem. If a deal is profitable but is destructive to society, then under those rules Wall Street is required to conduct the deal - and to profit by it. It doesn't matter to them who else gets hurt, that's their lookout. Do the series of deals lead to a collapse of the world-wide financial markets? Not their problem. They are responsible only for recognizing the problems they are creating in advance, then shorting the markets they themselves have created so that they can make profits out of the collapse.

OK. If that's the way Wall Street want things then society is going to have to step in and protect itself from Wall Street (and London's City) by regulating it. The size and nature of the collapse we recently observed clearly demonstrates that half-hearted regulation is not safe.

If vampires exist and are needed to keep the economy functioning at high efficiency, then it would behoove society to keep the vampires carefully strapped down and closely watched, allowing them very little freedom to go off the reservation and practice their blood-sucking ways without close supervision. They will never need as much blood as they will want.

It's hard to watch the evasion and hubris of the Goldman Sachs bankers yesterday and not comprehend that they are financial vampires with some limited utility in the financial system. That's the core lesson of the Goldman Sachs hearings yesterday.

For a description of the boring nature of the hearing, here is Time's Swampland

The Goldman hearing has conformed to a familiar pattern. Senators begin with pointed questions and descend into demagoguery; the bankers force stoic stares, and then, when they're forced to speak, essentially try to eat up clock until it's time to repeat the excercise.

Three of the four witnesses on this first panel -- Daniel Sparks, Michael Swenson and Josh Birnbaum -- supplied aggressively bland opening statements. The notable exception was Fabrice Tourre, a.k.a. the Fabulous Fab, the lone Goldman employee accused of fraud. In a strident denial, Tourre confronted the charges head on, relying heavily on the Big Boy Defense—that is, the firms who got soaked in the Abacus deal were among the world's most sophisticated investors, making bets that scores of other smart people made, and it's not our job to coddle or second-guess them. “I deny – categorically – the SEC allegation,” he said. The specificity of Tourre's opening remarks – compared to his colleagues, at least – seemed to demonstrate confidence in his case.

From there, though, the hearing has been reduced to basic theatrics.