I created this blog as a home for bankers who need to speak out and do not have a central clearinghouse or a safe place to do so. Big banks now treat their employees like property, bought and owned. Typically employees must subject themselves to all sorts of potential sanctions, forfeitures of compensation, clawbacks and even lawsuits if they speak in ways we often have thought were protected speech.
I am not talking about revealing confidential customer or proprietary information, I am talking about simply commenting on a company, management philosophy, making general observations or raising concerns. In today’s big banks, gag orders are written in the most intimidating way, included in Codes of Ethics, attached to incentive plans, posted on the company home pages. We should ask ourselves, what is the big secret?
Our financial system lacks the accountability to make it honest. I wish I could reveal more in these pages. The matters I discuss are always in the public record already or are just common sense editorializing. What underlies my perspective is my actual experience in working for a large bank, and the experiences of others I converse with who remain un-named.
I advocate strong and effective regulation to reduce systemic risk. Dodd-Frank did not do what it could have if it were not written under the influence of corporate lobbyists. It did not accomplish the single most effective thing it might have, the shrinking of Too Big Too Fail institutions and the restoration of a version of Glass Steagall that would have separated commercial and investment banking.
I advocate consumer regulation to bring simplicity and transparency to every day people who do not assume that every transaction should be undertaken with the warning, “buyer beware”. I favor a free market where those who fail, fail. The bailouts should have exacted a higher price to equity holders and bondholders. Instead, losses were taken by taxpayers and countless individuals and businesses large and small. Many millions remain struggle today. I do not favor just a mass of regulation. It should be strong and effective, but moderate in cost to comply. For every new regulation, one or more outdated regulations should be eliminated. One issue is the regulation, another is the enforcement. If penalties are simply small fines and individuals do not have a consequence for their unethical behavior, no meaningful progress will be made. There must be strong civil and criminal sanctions against predators, whether corporations or individuals. However, executive managers must not be able to simply throw sacrifices to the wolves. It is executive managers that create the cultures of predation. So they must be held accountable for what they create in their employees. This is a complex problem which must be addressed in a manner that does not stifle enterprise. I am not saying it is easy.
I favor a free market where new banks and new capital come into the industry to power innovation and entrepreneurship. Government policies where weaker institutions are constantly rolled into larger ones are counter productive. We need radical disruption in the financial services space. We need 20 new bank models to complete with the old and give people choice. The industry should not be monolithic. Regulation alone will not solve every problem. It falls on the citizens to vote with their money. The citizens can shrink the Too Big Too Fail banks. But they must have good alternatives.
I was read something just today that gave me hope. “Innovation constantly alters the character of the economy”.
Innovation in our own hearts and minds and new institutions that reflect our consciousness, can alter the economy.