Terror-Proofing Wall Street
In light of this week's terror warnings, this terrific new column by Jonathan Rauch is especially timely:
The 51st-floor corner office of Stuart Z. Goldstein offers a panoramic view of the New York City financial district, with the World Trade Center site smack in the middle. Goldstein was in London on September 11, 2001, but his colleagues gathered in his office to watch as many of their customers died. On the bookshelf by the door, Goldstein now keeps a binder with a blazing red cover. "Emergency Response Plan Reference Material," the cover says.
Only a few weeks ago, the Depository Trust & Clearing Corp., of which Goldstein is communications director, held an evacuation drill, with staff emptying the building and then reassembling at designated sites around the city. Employees, Goldstein says, need to know they can handle the walk down 51 flights of stairs.
America has changed since September 11. You don't always see the change, but it is there, nowhere more pervasively and importantly than at DTCC. DTCC? Chances are you've never heard of it. With luck, you will never need to.
If the economy were a house, DTCC would be the plumbing. It clears and settles the millions of stocks, government and private bonds, mortgage-backed securities, mutual fund shares, and other securities that are traded in the American financial markets. The markets, remember, trade only promises to buy and sell. After the trade, money and securities need to change hands. Only if the books close every night can buyers and sellers know their positions and resume trading the next morning. ...
If a major bank, a brokerage, or even an exchange were to go down, others could step in. "If we went out," says Jill M. Considine, the chairman and CEO of DTCC, "there would be no other, and the books and records of who owns what would be gone." As of September 10, 2001, the settlement system operated according to the adage of Pudd'nhead Wilson: "Put all your eggs in the one basket and -- WATCH THAT BASKET."
Things work differently today. Read how.