It seems too easy, and almost cliched these days, to bash the banks. And yet, astonishingly, just when you think you’ve heard the worst of it, some new piece of information comes to light that shows just how sick and rotten banking is right now. I fully understand, of course, that not every banker is corrupt and that not every bank is rotten all the way through. But as with so many lawyer jokes over the years, it’s beginning to feel like 99% of banks are giving the 1% of good ones a bad name.
Maybe it’s helpful to be more specific about my issue today. My scorn is directed mainly at the large, global investment banks, or large banks with investment arms. These banks have shifted over the past decade or so from institutions that provide the oil that makes the economy run smoothly and morph into profit-making and profit-hungry players in their own right (and players that add no physical value to the economic system at that). They’ve also been the chief catalysts behind pushing executive pay into stratospheric (and catastrophic) heights, and building an unhealthy culture of excessive pay for a few individuals who are not similarly ‘punished’ for losses and the risks they take. They seem to have no sense of shame that they needed to be bailed out by the public that they no longer serve in many countries around the world. They have deliberately misled customers – and, in some cases – actively reducing client’s profits in favour of their own. The list of charges is seemingly endless.
But, then, a few days ago, Goldman Sach’s lawyers accidentally released a series of internal documents that they had been spending millions of dollars to keep private over many years. It’s easy to see why they didn’t want these communications to be made public. They show a systematic failure of ethics, a widespread disrespect for the rule of law and a fundamental disregard for delivering value to clients. These specific documents shine the spotlight on the issue of ‘naked short selling’ (often thought of as a ‘myth’ in banking circles), but they are damning and embarrassing on so many levels for Goldman (and by implication, other banks like Goldman).
Read Common Dreams’ report on these released documents. At very least, banks should “do no harm”, and yet it seems they’re actively and deliberately causing damage to our world.
This story really just makes me sad. And I feel kind of helpless. If there was another industry so roundly screwing the planet, there’s be an outcry and pressure groups pushing for change. With all due respect to the “Occupy” and the 99% movements, we need more than a few hippies camping out somewhere – we need high level economists, politicians and business leaders to take a stand here. But, as Goldman’s documents show, these people are often bent by the money and power at play in the system. We also need those good people who work for banks to stop being either defensive or ignoring the issue and start to fix their industry from inside.
Banking is in trouble, and the system is rotten. Change must come.
For those inside banking right now, you must realise, surely, that each time banking as a whole gets hit with another jaw dropping issue like this, another nail goes into your industry’s coffin. All around the world, non-banking competitors are gearing up to ambush your industry: mobile phone operators, Google, Amazon, retailers, technology companies and governments are all eagerly seeking ways to replace you. Don’t be fooled: your industry is not bullet proof and it is not unassailable. Change will come, but meanwhile bankers are sleep walking into an agonising, slow death in which they do serious harm to all around them.
What can we do? What can we do if we do it together? How can we get the rich and powerful to join us?