Author: Dan Keeler

Dear Reader

February 2010 | Vol.24 No.2

Increasingly, among commentators on the financial services industry, there is a perception of bankers and banks as hungry carnivores, pouncing on every opportunity to take profits and showing no remorse when faced with a weaker prey. No doubt some bankers themselves revel in this depiction of their trade, but this crass characterization does the industry no favors. In a civilized world there is no place for such savagery, for such a ruthless beast that is a slave to its own, primitive instincts. It is hardly surprising, then, that society as a whole wants to cage this beast with heavier regulation and punitive taxes. Frankly, the banking industry has brought this on itself.

However, while it may be satisfying for politicians and the public alike to see the bankers’ outsized pay packets slashed by a government levy or a super-tax, the whole exercise is missing a fundamental and crucial point. At the height of the crisis—or perhaps the trough—it became clear that the financial system is in dire need of root and branch reform, that the very structure and fabric of the system is so fragile, overly complicated and riddled with unknown and unknowable risks that it is perpetually on the brink of collapse.

With every step up in global equity markets, though, the sense of urgency about the fragile state of the financial markets recedes. Now that times appear to be good again and banks are raking in astonishing profits, calls for sensible and far-reaching reform of the global financial system are giving way to howls of disapproval about pay and profits. Meanwhile, the rare opportunity for meaningful reform is slipping away, its proponents entangled in a mesh of arguments over regulations, jurisdictions, responsibility and blame.

This is simply unacceptable. The need for reform is as pressing now as it ever was. What is becoming clear, though, is that reform will not come simply as a result of changes being foisted on the banks. The institutions themselves must participate and cooperate, while the bankers must take their own, personal responsibility to the global financial system as seriously as they take their mission to make profits. If the bankers can stop thinking of themselves as hungry lions and start to see their role as guardians of the world’s savings and investments, it would be a start.

Until next month.

Dan Keeler