The US Senate’s passage of the Obama administration’s financial reform bill Thursday was hailed in the media and by official Washington as a landmark effort to curb the power of the big banks. But on Wall Street itself, the news was greeted with a mixture of dismissal and applause.
Bank stocks soared on Friday, with the share price of JP Morgan Chase, one of the biggest finance houses, surging 5.9 percent and helping drive the Dow Jones Industrial Average up 125 points. Other bank stocks rose sharply: Bank of America up 4.7 percent, Goldman Sachs up 3.3 percent, Morgan Stanley, Wells Fargo and Citigroup. The S&P financial sector index was up 3.6 percent overall.
The Wall Street Journal reported the rise in prices under the headline, “Financial Stocks Turn Higher After Senate Passes Reform Bill.” CNNMoney.com titled its story, “Bank stocks rally on heels of Wall Street reform,” noting that “major banks reacted positively to the reform’s passage, and shares climbed in afternoon trading.”
There is a striking and politically illuminating contrast between the market reaction and the populist phrases mouthed by Democratic politicians in Washington. Harry Reid, the Democrat majority leader in the Senate, boasted, “When this bill becomes law, the joyride on Wall Street will come to a screeching halt.”
