Main Street

What is 'Main Street'

Main street is a colloquial term used to refer to individual investors, employees and the overall economy. Main Street is typically contrasted with Wall Street, with the latter referring to the financial markets, major financial institutions and big corporations, as well as the high-level employees, managers and executives of those firms. You'll often hear about Main Street vs. Wall Street in rhetoric about the differing goals, knowledge levels, interests and political power of these two groups. Main Street can also describe a small, independent investment company (i.e., a Main Street firm) as opposed to one of the large, globally recognized Wall Street investment firms. Wall Street firms tend to serve large investors with multi-million dollar assets, like institutions, while Main Street firms tend to be better suited to serving small, individual investors by providing more personalized service.

BREAKING DOWN 'Main Street'

Main Street is often seen as being the opposite of Wall Street. This can lead to some very unpleasant attitudes on both sides. For example, some on Wall Street see people on Main Street as fools that try to dabble in a game they can't understand with tools and information that is next to useless against the resources of a Wall Street investment banker. Some on Main Street see Wall Street people as crooks with a void where their souls are supposed to be. The unfortunate fact is that both sides have a high degree of dependence on the other. Wall Street depends on funds and other collections of Main Street income like the banking system to generate the capital and fees that keep the lights on. Main Street needs Wall Street to get a better rate of return than a savings account or a municipal bond. Unfortunately, this mutual dependence doesn't do anything to improve the more extreme viewpoints on either side. 

Main Street Versus Wall Street

Some people think that what's good for Wall Street is bad for Main Street and vice versa. For example, regulations designed to protect Main Street investors are seen as hampering Wall Street's ability to innovate and profit. On the other hand, Wall Street compensation practices are seen as incentivizing short-term results and risk taking to eat up a larger share of profits that could be delivered more cautiously at a lower cost. Both of these scenarios may be true, but much of modern financial system depends on Main Street and Wall Street being able to work together. 

Of course, when Wall Street and Main Street do work together, things can go horribly wrong. This was seen in the financial crisis when people on Main Street wanted to own homes and use it as their primary financial vehicle. Wall Street was more than supportive and helped make mortgages widely available through securitization​ and a broken ratings system. The result was called the Great Recession for a reason. So we want Main Street and Wall Street to get along, but not too well.