I hail from a kinder, perhaps gentler age (or maybe I’m just kinda old), but I do remember a time when bankers were expected to uphold high standards of morality and ethical behavior. There was nothing wrong with that then, and I’d like to suggest there’s nothing wrong with it now.
I’m afraid the term ‘banker’ has become misused. Those who had no place wearing the label have adopted it for themselves. It’s part of the process of creating apparent respectability. There was a time when there were commercial bankers and merchant bankers (remember them?), private bankers and stockbrokers. Each knew exactly what his/her role was. The public had a pretty good idea where most of the scoundrels would come from and treated them with caution, though they were happy to take the investment gains from dubiously sourced information.
Then came ‘Big Bang’. The scoundrels took on the mantle of respectability. We created the investment bank – a contradiction in terms for many. This was institutionalizing a whole series of inherent conflicts. Everyone had to be quicker, more alert.
Most important, you had to have ‘skin in the game’. The justification (self-serving as usual) was that you couldn’t look after your customers’ best interests if you yourself were not taking the same risks. Trouble is, customers vary and so do their positions. Your skin can naturally be at variance with some customers’ interests. What happens, then, when there’s a choice between your skin and the customers’ skin?
It simply isn’t normal to burn your own skin, so why permit the continuation of a situation where ‘bankers’ have the opportunity to make such a choice? It may be time to get back to calling the spade what it is.
(In reply to IR Insider, April 28)
