Priority No. 1: Rebuilding Confidence in the Capital Markets

The financial crisis. Bank bailouts. Outsized bonuses. Insider trading. MF Global. Pipeline. After four years of jaw-dropping headlines in the mainstream press, it may be a surprise that people still invest their money in the capital markets. Considering the wave of bad news, even worse behavior and the subsequent pushback from any reasonable and warranted federal oversight, it's a wonder that many Wall Street firms still have clients.

And the hits keep coming. In March, Greg Smith dropped another bombshell on the industry. I spoke with brokers and buy-side traders about the fallout of Smith's now infamous resignation letter/op-ed in the pages of The New York Times.

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Not since Tom Cruise wrote his manifesto, stole the goldfish from the office fish tank and left with accountant Renee Zelwegger in "Jerry Maguire" have we seen such a dramatic and revealing exit. The former Goldman Sachs' trader confirmed many investors' worst fears: that brokers don't always have their clients' best interest at heart.

As trading volumes plunge, the buy side increasingly is searching the dark for liquidity, irritating festering distrust of the opaque markets. But even in the wake of the recent Pipeline scandal, dark pool volumes are up, so the buy side can't think they're all bad.

Meanwhile, the global exchanges are picking up the pieces after their plans for world domination fell apart. A series of national exchange mergers were scuttled in part by a rise in nationalism and in part by growing concerns over shaky regional markets amidst a sputtering recovery.

Speaking of which, where is that recovery? While some politicians spend more time talking about social issues and how recent job numbers are trending up (even though they appear to be stalling), this anemic recovery might be it for a few years. Sure, brief lights will appear, such as a Facebook IPO, for example. But this grinding slog will continue until we regain confidence in ourselves and the financial system we have created.

Perhaps the Masters of the Universe, as Tom Wolfe called them in "The Bonfire of the Vanities," can see the damage they have wrought and make some needed repairs. But first the brokers have to realize that something is broken.