Let the NYSE heal itself--and thrive again.

We may have just witnessed the 21st century equivalent of a mob lynching. Put aside for a moment whether Dick Grasso deserved $140 million for 36 years of service in which he defended the New York Stock Exchange against the Internet challenge and September 11. Put all that aside. An incredible torrent of reporting and commentary erupted over his compensation. Pension fund chiefs were moved to comment. Senators stood on the floor of the U.S. Senate to express outrage.

Was there any semblance of a rational debate about how much Grasso might deserve versus how much, say, the New York Yankees' Derek Jeter makes? Did anyone stop to analyze what might have happened to the Big Board if Grasso had played technology the wrong way, or if he had failed to lead a rebound from the devastation of the terrorist attacks? Absolutely not. The shouting drowned out everything.

Now Grasso is gone. But the feeding frenzy may not be over. Some influential voices are beating the drums for radical, sweeping changes at the Big Board, including a whole new set of directors and a division of the exchange's trading and regulatory functions.

We say it's time for a timeout to talk common sense. The NYSE is a 211-year-old institution that maintains a delicate balance among 1,366 members who have competing interests--specialists and brokers, for example. The exchange also must maintain relations with 2,800 listed companies, some of which have large capitalizations and others much smaller. Together, they have a staggering combined market capitalization of $14.8 trillion. That includes 473 companies from 51 other countries. More than 1 billion shares routinely change hands every day.

In short, the Big Board is not only an icon of American capitalism; it's also a linchpin of the entire world financial system. If the NYSE were to be put through externally mandated reform, the ability of thousands of companies to raise capital could be compromised and the wealth of 50 million investors could be reduced. If the broader goal is to restore confidence in the U.S. economy and its financial markets, putting the NYSE through traumatic change is the wrong course of action.

John Reed is an inspired choice as interim chairman to guide the institution into the reform and confidence-building it needs. But he shouldn't be stampeded into any precipitous action. We can see that he already is introducing more transparency, and that's healthy. We expect he will push for further carefully considered reforms.

One argument that's been made against the exchange is that it was first to impose new listing requirements for public companies and those requirements to a large extent shaped the Sarbanes-Oxley Act. So why shouldn't the exchange have to live by the same rules it helped establish?

The answer is that the exchange isn't a public company that raises money from investors. It's a private, not-for-profit membership-based institution. We're not big fans of Sarbanes-Oxley, but it's ludicrous to argue that a set of rules designed for one kind of entity should be applied to an animal with completely different stripes.

Moreover, the way the exchange balances trading and regulatory functions is unique. No external cookie-cutter solutions will work. As for the board, a healthy number of members should be on it. Yes, they are insiders. But how can the NYSE effectively govern itself if its board is completely dominated by independent directors who don't understand the mechanics of how the exchange really works?

If Reed were to conclude that the exchange should change its structure, and issue shares to its members to effectively become a publicly held company, then a new set of rules would, in fact, have to apply.

But unless that happens, we say, leave the Big Board alone. It has centuries of wisdom and experience. It will heal itself--and thrive once again.