Wall Street Report: Big Profits amid the Ruins

In separate interviews Wharton finance professors Franklin Allen and Jeremy J. Siegel offered contrasting reactions to the large second-quarter profits at Goldman Sachs and J.P. Morgan. Allen said that while the firms’ quarterly results reflected overall gains on Wall Street  ”by and large you can’t make large sums of money without taking risks.” He worries that the government’s intervention in the financial sector last fall which benefitted these firms and others created an environment of moral hazard. Siegel was less concerned about this issue noting that ”both these firms now have a lot to lose after having recovered a lot.”

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