Swearing bankers…but not how you might think
“I swear that I will do my utmost to preserve and enhance confidence in the financial-services industry. So help me God.” - Dutch Bankers Oath
Perhaps the only transparent achievement of the current generation of bankers has been unifying so much of society against them. True, estate agents are (with good reason) widely reviled, while political reputations generally correlate with their inability to deliver economic growth and leadership – in the West, at least.
However in the modern era, bankers really unify a remarkable broad church of negative opinion! That is perhaps hardly surprising as they have proven insufferably hypocritical and incompetent - losing money, espousing capitalism while being de facto subsidized chattels of the state. Part of a worrying ‘grand coalition’ of government and bankers, whose aims appear more aimed at self-propagation as opposed to delivering prosperity for society.
Thanks to the socialization of banker power (they get to keep any profits, taxpayers get to pay the losses, all sanctioned by government intervention), their industry remains broadly on the nose (and impotent).
Therefore banks have a huge problem: a rather comprehensive trust deficit. This is hardly surprising given that all manner of bankers worldwide seem to have operated for years with a “heads we win, tails the customer loses” attitude. Payment systems and the core financial infrastructure are expensive and inadequate for the digital age. Travel across borders and however you try to pay, the banks gouge chunks of your payments left, right and center.
In essence, banking is at a crossroads - they have an enshrined monopoly on money, yet nobody trusts their ability to provide a decent service.
True, this banker monopoly will not last - indeed 2008 marked the high-water mark in the history of banks at the epicenter of finance. Crypto-currency and other disintermediating types of technology are already reducing the future dominance of banks. However that will take some to play through the system, so in the interim citizens are being held hostage by an expensive, incompetent banking system.
In an effort to improve bankers’ position, many approaches are being proposed. The UK has just published a report into banking which promotes some rather anemic proposals for the future of the industry. One proposal the UK turned down, has, however been adopted by the Netherlands.
All 90,000 Dutch bank staff will be forced to recite a pledge to preserve and enhance confidence in the financial services industry (the religious element can be replaced by a suitably atheistic statement if required).
Of course this clearly leaves the industry open to some element of ridicule. At the same time, there can be no doubt that the core tenet of commerce is always trust – where that does not adequately exist, the economy will veer towards failure.
Moreover, the failure of the political system in maintaining the banking system when it had degenerated to a parlous state in 2008-2009 has left a huge fetid mess in its wake. Banking needs enormous reform to generate trust if it is to go forward. A bland pledge is a start, but the entire culture, let alone the operational abilities and the infrastructure all need wholesale change: few, if any bankers have been held remotely accountable for their lamentable management during the boom. True a few are on trial currently in Dublin, but the hypocritical Obama regime, like the EU, has been quick to bitch and slow to enforce laws against managers and mortgage fraudsters alike.
Not only have governments bailed banks out, their political partners on the left and right have failed to hold them accountable! By creating a skewed situation where the bankers win when they speculate successfully but the taxpayer is held accountable for losses, the entire commercial system is in danger of breaking down. That’s before accounting for the fact that after billions of dollars spent on bailing out banks, they continue to transparently fail to deliver lending to the real economy, particularly that engine of growth, small business.
Ultimately a pledge to uphold a moral fabric for banking makes sense, but it is a tiny step and essentially an insult to all those who have been taxed to pay for the bankers’ failures. It’s quite endearing that the Dutch think consumers will consider a pledge to be honest as a cure for a broken system...Or utterly delusional. Perhaps both.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.