Wall Street's Image Problem

NEW YORK (TheStreet) -- When asked what he thought about an underling's e-mail message describing a deal as "sh*tty," the response of Goldman Sachs (GS) CFO David Viniar was honest, but probably gave his public-relations team a collective aneurysm.

"I think that's very unfortunate to have on e-mail," Viniar said in response to a question from Senator Carl Levin (D., Mich.) on Tuesday, barely disguising a smirk.

(GS) On one hand, the remark was a refreshing burst of candor in a tense, day-long hearing full of grandstanding and evasion . But it was also representative of the larger problem with Wall Street: They just don't get it, and sometimes don't even bother to pretend.

There have been precious few signs that the financial industry acknowledges the havoc it has wreaked in average consumers' lives. That's partially because the industry feels -- rightly so -- that it isn't entirely to blame. But it's also because the Wall Street titans that President Obama described as "fat cats" a couple months ago are so far removed from the situation, that they've turned a blind eye to its severity.

(GS) "I think the banks thought the bailouts were the end, whereas it was just the beginning," says Doug Landy, a onetime Federal Reserve lawyer, who now heads Allen & Overy's bank regulatory group.

Indeed, in the court of public opinion, Big Banks are the villains. Without the tremendous amount of taxpayer support that has been extended, banks may have succumbed to the crisis. And now, they have recovered miraculously while the real economy continues to bumble along.

(GS) "We have 18% real unemployment and 15% of mortgages either 60 days late or in foreclosure," says Jack Reutemann, head of Research Financial Strategies. "If you're in one of those groups and look at what Goldman Sachs did or Bear Stearns did, or some hedge fund that stole $100 million, you become extremely angry. They all get painted with the same brush."

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