Nov 02 2008
A survey of the Financial Times Deutschland (FTD) among German bankers has confirmed what many suspected: Someone from outer space must have caused things to go wrong, because German bankers are ‘just amazing’ and have nothing whatsoever to do with the current crisis.
The FTD sent its survey questions (on what went wrong and what should be done) to a long row of German banks, but only a few bothered to reply. None of the big banks (such as Deutsche Bank, Commerzbank, Postbank) responded. Only six smallish banks replied and of those only a single one admitted the banking community buggered up when it came to understanding the risk inherent in some of the complicated financial instruments developed and extensively used by players in the sector.
The others all said they did not support the idea of a body/institution/regulator of new financial products (to decide which may be used), because “there is nothing better than the market for evaluating risk and deciding which products to use and which not”.
Now, now. For the last ten odd years “the market cocked up”. In fact, the banking industry buggered up in such a big way over the last decade, it’ll take a few more years to calculate the damage (the wave of hedge fund failures must still roll over us). So, the banking industry couldn’t (or didn’t want to) use the products it had developed in a responsible, sustainable way. For years and years the industry used products without properly evaluating their inherent risks.
But, still the banking community thinks it did nothing wrong. Our problems were caused by things from outer space…
I’m sure bankers the world over have a surprise waiting for them: When the “new banking system” is in place, the financial products used by the banking industry around the world will be regulated tightly, a number will be “banned” outright and (in future) many new products will never get close to the market.
It will never be “business as usual” again for financial institutions (deliberately using the term here to indicate something wider than banks).
* The survey results were published in the FTD of 31/10/2008.