Street wise - Take On the Street: What Wall Street and Corporate America Don't Want You to Know. What You Can Do To Fight Back - Book Review

Washington Monthly, Nov, 2002 by Jane Mayer

TAKE ON THE STREET: What Wall Street and Corporate America Don't Want You to Know. What You Can Do To Fight Back by Arthur Levitt Jr. and Paula Dwyer Pantheon, $24.95

BEFORE HE MADE MILLIONS ton Wall Street and went on to become, under Bill Clinton, the longest-serving chairman of the Securities and Exchange Commission in history (the one who famously attempted to reform notoriously resistant accounting standards), Arthur Levitt Jr. had another ambition. He wanted to be a writer. After graduating from Williams College, he got a job reviewing plays for a small newspaper in the Berkshires. Levitt's father, however, New York State's even-longer-serving comptroller, Arthur Levitt Sr., was a practical man. He had counseled his only son against going to law school, because he felt the profession didn't pay well enough. One can only imagine what he thought of journalism. At any rate, young Levitt didn't dally long in the profession, throwing in his lot instead with some other young men such as Sanford Weill, now the chairman of Citigroup, and Arthur Carter, now publisher of the New York Observer, to found what would become the thriving Shearson Lehman stock brokerage firm. But now, after a full and bountiful career, Levitt has apparently decided to go back to his first love. The result is a book co-authored with Business Week reporter Paula Dwyer, Take On The Street: What Wall Street and Corporate America Don't Want You To Know. What You Can Do To Fight Back.

The book is sometimes as unwieldy as its title, crammed with information aimed at pleasing virtually everyone from expert to novice, of use to both the first-time investor and the experienced policy wonk. But to the surprise, perhaps, of those who see Levitt as a silver-haired establishmentarian, what he has written is in essence an expose, laying bare an amazing array of traps and rip-offs that await unsuspecting investors. To his credit, long before Enron, Tyco, and the rest of the corporate scandals caught the public eye, Levitt had already devoted much of his career in public service to serving the millions of small investors who have flooded the markets during the past decade, whose lack of sophistication, knowledge, and connections left them at the mercy of unscrupulous insiders. The typical American stock owner, Levitt points out, is no longer particularly wealthy, with an average income of $65,000 and total household assets of $85,000 (and that was before the recent market downturn). His book seems aimed at providing such newcomers to the world of high finance with a kind of underground guide to Wall Street. He reminisces uneasily about the pressures he felt as a young stockbroker to cut corners at the expense of his clients, and in surprisingly frank terms--given his vaunted career on Wall Street--he warns investors that, for the most part, they'd be better off firing their brokers.

While Levitt's public-spiritedness is obviously laudable, and the guide he has produced is clearly useful, some of the more consumer-oriented chapters in Take On The Street are about as scintillating to read as the average home-repair book. One such chapter, which shines a light on the murky area of the mechanics of stock trading, is aptly entitled, "Pay Attention to the Plumbing." Although this chapter is a tough read, Levitt's point, one easily forgotten during the past decade of go-go investing, is worth making: that there are myriad hidden costs and risks beneath every form of investment, even "no-load" mutual funds, and anyone who doesn't take the time to figure out just how their brokers are making money, is a consumer waiting to be ripped off.

To the relief of readers looking for more than a consumer guide, Levitt is not a dull man, nor an unambitious one, and so he's done a lot more here than write a how-to book. Not content merely to take on Wall Street, he takes on Washington too, transforming the book from the category of personal finance into a candid, pointed, and eye-opening political memoir. Affable and polite to a fault, Levitt must have found it hard to name the names of those who deserted the public interest in the service of their campaign contributors, but he does here. Even some of his friends and erstwhile allies, such as Connecticut Sen. Joe Lieberman, are hung out to dry for fealty to their big corporate backers. Levitt is particularly strong in exposing the venality of the accounting profession, providing a wonderful inside account of the eight-year battle royal that accounting firms waged with the help of their pawns in Congress against even the most reasonable attempts at regulation. Levitt tried to warn the public at the time, but few could get past the mind-numbing details to see the political tsunami gathering force. Recent events, however, have proved him prescient. For anyone who now wants to understand how Enron, Arthur Andersen, or their own portfolios collapsed, Take On The Street is a must-read.

Distinctive as Levitt's book is as an insider's history, it is also unusual by the standards of Washington memoirs. During the Reagan years, David Stockman and Donald Regan set the standard, using their memoirs to settle scores and buff their own legacies. Since then, George Stephanopoulos, Robert Reich, and other Clintonites have followed suit. But very few of these books have aimed at targets beyond their personal enemies. Most have been extensions of office infighting. What Levitt has tried to do here is quite a bit more valuable. Read from cover to cover, Take On the Street provides a comprehensive indictment of the overwhelming influence of private-interest money in Washington, tracing its course from the corruption of Congress to the resultant fleecing of consumers. It's a devastating picture, and one that adds to Levitt's reputation as a serious reformer in a thankless field. Most insiders with access like his stay inside the club. Luckily, Levitt has instead retained the eye of an outsider, and the long-ago wish to be a writer.