Federal Hall, 26 Wall Street, New York: It was on this site that the US Congresss first met and where George Washington took the oath of office as the first president. Today, the "free enterprise" business titans of the Street are dependent on US government policymakers to rescue them from the mess of their own making.

Wall Street contrarian James Grant says that through history, outrageous financial behavior has been met with outrage. But today Wall Street's damaging recklessness has been met with near-silence, from a too-tolerant populace.

The editor of Grant's Interest Rate Observer wrote in the Wall Street Journal on Saturday that the American people are famously slow to anger, but they are outdoing themselves in long suffering today. In the wake of the "greatest failure of ratings and risk management ever," to quote the considered judgment of the mortgage-research department of UBS, Wall Street wears a political bullseye. Yet the politicians take no pot shots.

Grant writes that late in the spring of 2007, American banks paid an average of 4.35% on three-month certificates of deposit. Then came the mortgage mess, and the Fed's crash program of interest-rate therapy. Today, a three-month CD yields just 2.65%, or little more than half the measured rate of inflation. It wasn't the nation's small savers who brought down Bear Stearns, or tried to fob off subprime mortgages as "triple-A." Yet it's the savers who took a pay cut -- and the savers who, today, in the heat of a presidential election year, are holding their tongues.

Grant says Wall Street is off the political agenda in 2008 for reasons we may only guess about. Possibly, in this time of widespread public participation in the stock market, "Wall Street" is really "Main Street." Or maybe Wall Street, its old self, owns both major political parties and their candidates. Or, possibly, the $4.50 gasoline price has absorbed every available erg of populist anger, or -- yet another possibility -- today's financial failures are too complex to stick in everyman's craw.

"I have another theory, and that is that the old populists actually won. This is their financial system. They had demanded paper money, federally insured bank deposits and a heavy governmental hand in the distribution of credit, and now they have them. The Populist Party might have lost the elections in the hard times of the 1890s. But it won the future," Grant wrote.

The Wall Street of the Morgans and the Astors and the bloated bondholders is today an institution of the mixed economy. It is hand-in-glove with the government, while the government is, of course -- in theory -- by and for the people. But that does not quite explain the lack of popular anger at the well-paid people who seem not to be very good at their jobs.

Financials as a percentage of S&P 500 market capitalisation rose from 8% in 1990 to almost 25% at the height of the housing boom and in recent times, the cut of the Fed's federal funds rate to 1% facilitated the out-of-control asset boom.

James Grant writes that Wall Street is usually described as an industry, but it shares precious few characteristics with the metal-fasteners business or the auto-parts trade. The big brokerage firms are not in business so much to make a product or even to earn a competitive return for their stockholders. Rather, they open their doors to pay their employees -- specifically, to maximize employee compensation in the short run. How best to do that? Why, to bear more risk by taking on more leverage.

Grant cites Morgan Stanley, which had a ratio of assets to equity of 33 times at year-end 2007 from 26.5 times at the close of 2004. In 2007, Morgan Stanley paid out 59% of its revenues in employee compensation, up from 46% in 2004.

They borrow to the eyes and pay themselves lordly bonuses. Naturally -- eventually -- they drive themselves, and the economy, into a crisis. And to the scene of this inevitable accident rush the government's first responders -- the Fed, the Treasury or the government-sponsored enterprises -- bearing the people's money.

Recently, Prof Peter Morici wrote in Finfacts: ...the banks' problems are much deeper and far reaching than their losses on subprime securities. Citigroup's losses on Old Lane hedge fund provide a classic illustration. To attract CEO Vikram Pandit, Citigroup purchased Old Lane for $800 million. Although the fund never made much profit, the transaction netted Pandit $165 million. Subsequently, Citigroup wrote down more than $200 million in losses. Pandit used some of his proceeds to purchase the late actor Tony Randall's Manhattan apartment for $17.9 million, and Citigroup shareholders took the loss. Nothing Bernanke has proposed will stop that kind of reckless behavior, which has nothing to do with the subprime debacle.

The markets are in "uncharted waters," Robert Rubin, Chairman of the Citigroup Executive Committee, said in a speech earlier this year. He urged the US government to exert itself on behalf of the mortgage market and the American homeowner.

James Grant wrote in the Washington Post:And who are these bankers who went sailing off the end of the Earth and thereby find it necessary to pass the cup to the government? The company of errant, if lavishly compensated, navigators includes none other than Rubin himself. Last fall, the former Treasury secretary confessed to Fortune magazine that until the mortgage storms broke over his head in the summer of 2007, he was unfamiliar with the kinds of complex mortgage structures with which Citi's own balance sheet was packed. Almost certainly, the gulf between competence and compensation on Wall Street has never been wider.

As for Morgan Stanley, in 2005 its ousted CEO Philip Purcell, was given a $113 million severance deal.

In addition to medical benefits, $250,000 in lieu of other benefits and an office with an administrative and secretarial expenses budget for every year for the rest of his life, Morgan Stanley makes $250,000 in charitable donations a year in his name. Purcell doesn't even have to write his own charity cheques, never mind providing the funds!

Last week, investment bank Merrill Lynch announced that subprime-related writedowns over the past year had hit $40 billion. In late 2007, its Chairman and CEO Stan O'Neal got a golden boot worth $161 million.

O'Neal was earning a basic salary of about $25 million.

Contrast the greed of the hired hands at the top of the pile with the treatment of perceived lesser beings.

Job shedding on Wall Street is now likely to be more a week-to-week culling rather than via a headline announcement. From Tuesdays to Thursdays, people are usually informed that they are for the chop. It is reported to be not unusual for a financial house employee to arrive on an office floor only to find personal effects piled in the corridor and the office sealed.

The holders of the reins of power in politics and business invariably seek to monopolise all the credit for good news and find scapegoats for misfortunes.

On CNBC last week, Abbot Laboratories Chairman and CEO Miles White was asked about his 48% hike in 2007 salary to $30.2 million. In fiscal 2007 net income jumped 110% from the previous year.

White said most of his salary was "performance" related.

"I don't think we expected it to be in this kind of economic environment," White had previously said. "We're fortunate to be in a position with new product launches."

If the truth be known, White as a hired hand may have had one of the easiest management jobs in the company in 2007.

In US business, monopolising credit brings huge gains for the hired hands at the top.

The chief executive officers of large US companies averaged $10.8 million in total compensation in 2006, more than 364 times the pay of the average US worker, according a survey by United for a Fair Economy.