Bankers. Fashionably Evil.

Since the beginning of the 'Global Financial Crisis', there has been a tremendous amount of blame laid at the feet of those in Wall Street and bankers in general. It's almost as if the word 'Banker' has become a taboo. Nowadays it is more likely to be uttered in the same sentence as 'drug dealer' or 'murderer', than it is to be spoken about with regards to anything positive.

However surely it would be more beneficial for society to accept a collective responsibility and share of the blame, instead of merely pointing the finger at 'The Bankers'. The role of the media and politicians are just as responsible but it seems that there has been a general consensus that it would be easiest to use the 'Evil Bankers' as a scapegoat.

Credit Crunch : The Blame Game

I stumbled upon a very interesting article written by the 'BBC'. The piece was written illustrating different perspectives as to who was primarily responsible for the Credit Crunch and ultimately the current economic turmoil. Interestingly there was a wide range of people that were on the receiving end of having been 'finger pointed' at. These ranged from 'those Clever Bankers', 'those Greedy Bankers', 'Alan Greenspan' and even 'those Estate Agents'. Whilst 'those Bankers', were not the only ones being instigated, it seems as though the most vicious and venomous attacks were reserved towards their direction.

Peter Morici, who is an ex-adviser to the US Congress and government, is the one in the extract responsible for blaming 'those Clever Bankers'. He presents a rather sarcastic and satirical argument about how the bankers success was due to, "making risks evaporate in the morning sun, or the shadows of Wall Street, this seems to be where the wealth lies". Peter Morici continues by repulsively describing their actions, "they bought each other's debt and erased one another's risk by dealing with one another in a giant chain letter. Until someone realized that what they were trading wasn't worth a hill of beans."

Whilst I definitely do not concur with most of what Mr. Morici says, I found his view-point and style of expression very amusing and enjoyable to read. He certainly knows how to 'exaggerate a point' in order 'to prove a point'. This is evident when he says, "the house of cards has collapsed, but were these guys the fools? Or do true wizards live on Wall Street".

Robert Reich, a former U.S. Labor Secretary, put forth the motion that 'those Greedy Bankers' were responsible. In many ways, Mr. Reich is blaming exactly the same set of people that Mr. Morici was targeting, he just chooses not to afford them the same adjective and does not perceive their actions as 'clever' but more sinisterly 'greedy'. Robert Reich seems to condemn the morality behind the actions of Bankers as he claimed, "Greedy bankers have been running a giant con-game. They figure if they can persuade investors to buy something that's actually worth nothing, it might appear to be worth something, which lets them persuade others to buy even more, because -after all- by this time lots of investors are buying it." This former politician certainly does not agree with Gordon Gekko's (Michael Douglas) speech that 'Greed is Good'. Not only does he lay the blame solely at the feet of the 'Greedy Bankers' but also sends out a cautionary message to them as he warns them that once a financial system lets the masses down, it takes decades to rebuild that trust.

The next scapegoat in the firing line is Alan Greenspan. William Fleckenstein, a author and hedge fund manager, links the current turmoil to the inaqequacy of Greenspan's tenure. He reflects, "It was Alan Greenspan, as Chairman of the Federal Reserve, who decided that central banks like his should not try to dampen down the sort of speculation that leads to speculative bubbles in the first place." Mr. Fleckenstein mentions that when the speculative bubble collapsed, after the prices of companies no longer represented anything remotely resembling their underlying value, Alan Greenspan simply bailed out the financial system. This meant that small-bailouts turned into large-bailouts and interest rates were held at the "absurdly low level of 1%, for far too long". This caused problems for the 'housing sector', which were "nourished by the complete abdication of lending standards in the banking system".

Whilst Mr. Fleckenstein is not alone in his condemnation of Alan Greenspan and admittedly he could of done things very differently, these issues are very easy to criticise and speculate over in hindsight. I'm pretty sure that he didn't feel so critical when everything was going well and the economy was booming. Although his points didn't contain the same level of comic value that resonated through Mr. Morici's extract, there was evidence of a little bit of wit included in his conclusion. He lamented that "the very institution that had the regulatory authority to supervise the banking system was the one cheerleading, in the form of the Fed and Alan Greenspan." This was as he put it, "like putting the bartender in charge of conducting the breathalyser."

Last but not least, is 'those Estate Agents'. Norma Garcia, a Senior Attorney with the Consumers' Union in the U.S., attributes the responsibility of the crisis on the role that the 'Estate Agents' played. Her view is that the estate agents would sell the idea of 'Living the American Dream' and "get potential home-owners into homes to earn their commission and that they were more concerned about closing the deal than making sure their customers could afford the payments down the line." Norma Garcia then seems to undertake a 'Morality 101' lesson as she reminds the guilty estate agents that, "it isn't just about getting a buyer into a home - it's also about making sure that that buyer has access to quality credit that isn't going to result in a foreclosure, should the buyer hit one rough bump in the road." She reflects on her argument by indicating that Credit Suisse has predicted that roughly 6.5 million homes will go into foreclosure in the next 5 years. That she says, "is a lot of lost dreams".

This article was well constructed as well as thoroughly-entertaining. However I would have enjoyed it even more, if the author had reflected upon which view-point he agreed with. I guess another way of looking at it would be to say that this method works better as it allows the reader to 'make up their own mind'. As I mentioned in my introduction, I feel that the problem with society today, is that there always seems to be the necessity to target a scapegoat. We would have progressed much further if we worked towards a 'collective mentality' as this would allow us to spend more time fixing the problem and not analysing who would be the easiest target to blame.

Websites Read:

http://news.bbc.co.uk/1/hi/business/7525724.stm

Here's A Little Extra:

Below is a link to a video which has Gordon Brown interviewed by the BBC:
http://news.bbc.co.uk/1/hi/uk_politics/8277161.stm

I chose this video because it is a further indication how various politicians and industry experts try to deflect the blame that they should shoulder in a crisis by 'pointing the finger' every other direction but inwards.

The interviewer was clearly trying to get behind the rhetoric that Gordon Brown was using and whilst he mentioned that he would explain the details in a minute, he simply went around in circles using strong language to explain what was going to be done without mentioning how.