The New York Times DealBook blog links to an article in The New Republic (published Friday) by Larry Grafstein and Jim Millstein, two managing directors at the investment bank Lazard, blaming Wall Street for the current financial mess.

Excerpt from The New Republic (emphasis mine):

Those on Wall Street who do not feel ashamed of our
current financial predicament ought to. An industry that took pride in
its savvy risk taking spectacularly failed to gauge risk. Firms
animated by an ethos of independence and innovation have found
themselves dependent on (at least) a $700 billion government backstop.

As
Congress debates the staggering sums proposed by the Troubled Asset
Relief Program (TARP), there is naturally concern among both liberals
and conservatives that the program is ill-conceived. Much of this
anxiety, however, stems from a series of misconceptions about the
origins of the crisis. Cutting through these misconceptions helps
illustrate the importance of TARP: why it will provide a modicum of
stability to the financial system, allowing us to avoid the worst of a
prolonged downturn–and why, in the long run, it is insufficient.

One dangerous misconception is that the crisis "begins and ends with government," to quote a column by Kimberly A. Strassel in The Wall Street Journal.
In her narrative, easy money "inspired banks and mortgage firms to
borrow more and take riskier bets." While the combined effect of
monetary policy, capital requirements, accounting rules, and
government-sponsored mortgage subsidies certainly created the context
for the crisis, blaming Washington gets it precisely backwards. It was
the decisions of the investment and commercial banks that generated the
shocks now reverberating in the Capitol and throughout the economy.

Read more

• Read the DealBook post
• Read the New Republic article