Lehman exposes Wall Street’s moral bankruptcy

The enduring image of Wall Street's last systemic scandal, the insider-trading crimes of the mid-1980s, was that of a young trader sobbing as he was led off the trading floor in handcuffs. As the tears dribbled down onto his red braces, his peers gazed on in both pity and terror that they might be next.

These were the Gordon Gecko years when punishment followed crime and even the mightiest financiers found themselves donning the striped pyjamas.

The sums involved in those scandals, however, look trivial compared to the colossal heist committed against ordinary investors and taxpayers these past few years by some of the world's biggest financial institutions.

The bankruptcy of Lehman Brothers and fire sale of Merrill Lynch are cataclysmic events for Wall Street. Many thousands of employees and investors have seen savings evaporate,

not to mention lost their jobs.

At Lehman as at many banks, every employee, from the most senior executive to the humblest secretary, received roughly half of their compensation (salary plus bonus) in stock, which they were not allowed to convert to cash. They could borrow against that stock to buy homes, which many did, but suddenly their collateral is worthless.

In New York, the carnage on Wall Street is an intimate, local story. Thousands are suddenly scrambling for work, struggling to pay for homes they bought when they thought they were rich. Investment banks are huge employers and the demise of three in a year - including Bear Stearns - has left the city angry and considerably poorer.

Those at the very pinnacle of these banks, however, walk away exceedingly rich despite what they leave behind. Execs at Fannie Mae and Freddie Mac, the mortgage firms bailed out by the US Treasury last week, continued to receive multi-million dollar pay packages even as they plunged towards disaster.

For all the immediate pain of these past 24 hours, bankers have gorged for years on