Davos Banker Rehab Clinic Needed
Written by NMM, Feb. 2010
The game is up, finished but like a sick mental patient investment bankers haven't looked in the mirror and done some soul searching as we all anxiously wait. Forget the symptoms they've been deluding themselves with like prior insufficient government regulations, public appetite for credit or risky technology joint ventures. Wasn't their $50K MBA education meant to guard against these very conditions? Ten years later and they’re still addicted to easy money like professional athletes but with no risk of knee injuries. Only the sound of complex derivatives or computerized flash trading gets them up in the morning. Forget about any future hope of these bankers patiently sponsoring long term community growth. Davos needs a good rehab clinic for bankers not a Google party on Friday night. Their bonuses, still a quick fix just postpones their cure when what they really need is tough love. Their modest offers to be Saturday night philanthropists isn’t going to cut it either. They’ve been sick now for more than ten years, dragging down sagging US equities behind them and we’ve all had more than enough. Will shock treatment like warnings about fees, limits on size or a halt on prop trading finally push them into rehab. Do they really need to hit rock bottom like drug addicts before checking in. We’ve incarcerated but only a few worst mad cases. Are they at least getting the same rehabilitative counseling that millions of unlucky Americans get for smoking a simple joint? Was that what they were doing in the first place or could it be their ultimate cure. Prescribe them medical marijuana so they’ll be as confused as the public about these insane new derivatives built to invent virtual money from debt swaps, sub-prime mortgage derivatives, currency speculation and now new twists in corporate bonds.
Long before the collapse or bailout of Lehman’s, Iceland and Bank of America the public has wanted an honest and open dialogue about bank conduct. Whether it was about truthful credit card compound interest calculations or patronage appointments of former bankers into influential judiciary positions most of us have deep seated mistrust of bankers. Even in conservative countries like Canada the banks continue to resist open discussions on the Bank Act, virtually unchanged in more than 75 years.
Slick bankers elevate themselves, posing as invaluable and vital to the public good. Yet their service to provide for secure money transactions produces not one direct material improvement in our lives. They’re job is to manage money not lose it. They don’t build the infrastructures that keep us warm, the technologies that improve our lives or the medical advances that raise the quality of our lives. Yes, their products have been getting more sophisticated like Credit Debt swaps and sub-prime derivatives but nothing changes the fact that their business is primarily with counting, saving, loaning and accumulating money. Its’ purpose is primarily to facilitate secure monetary transactions for the public or groups of the public like a corporation. Frankly, the public has grown very tired of smooth talking bankers promoting themselves and their services as the centers of our universe. Talking circles around the public about their ever increasingly complex investment instruments is behind this crisis and they’re at it again with resisting new regulations. Bankers will never reform themselves and politicians with debts to banking lobbyists have their hands tied. I don’t see how a Federal Reserve staffed with past bank executives from Goldman Sachs can break this cycle and renew trust within the public. When the crisis was reaching its climax it’s now clear that former Goldman Sachs employees at the Fed put their past firms interests before the public’s when bailing out AIG. They even declined the initiatives from foreign creditors to decrease counter party claims in the AIG bailout to save taxpayers money so no one would question the deals. Which reasonable minded person could believe that Fed loyalties to firms like Goldman Sachs were not behind the poor choices they made in this matter?
While our stomachs revolt its agreed that we can’t focus our energy now on the apparent selective and preferential treatment extended during the bailouts. These can and will be excused as errors made in the heat of the moment for the greater good. Our challenges is to ensure sure those days don’t return. This is the right priority. It starts with telling bankers what the rules are not asking them which ones they like. Focusing on tight new regulations, removing any individual bank loyalties at the Fed and clear transparency on all CEO’s including their bonus policies and lobbying efforts. We can’t also make the mistake of excluding those investment banks who actually thrived in the crisis as this will only renew the cycle of greed and deception that took us down that road.
How is the public reacting to all these disturbing ethical questions about bankers? Does it lead a businessman or worker to feel a sense of his own accountability in starting a small businesses or when buying a home? Isn’t it a proven argument that mistrust in the banks leads to short term opportunistic relations like a prenuptial agreement. Walking away in bankruptcy becomes an option from set go. As long as arrogant bankers living high on the hog and presenting themselves above the needs and thinking of everyday citizens place themselves above other citizens we can expect no conscience within the public to feel justified in screwing the banks or insurance companies. Small community bank leaders connected with their neighbours makes more sense and is consistent with the proposed regulations to limit size against too big to fail. Just because its populace doesn’t mean it’s wrong. That’s been the argument from the bank cliques now for decades and look where it brought us. The bottom line is they only believe in their own circle of friends and most people simply don’t trust any of them.
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