The European Union needs more non-bank finance. Banks are on the back foot. On their own, they won’t be able to fund the jobs and growth the EU is desperate for. Non-bank finance needs to take up the slack.
The Great Debate
Lloyd Blankfein, the chief executive officer of Goldman Sachs, once famously said he believed banks were doing “God’s work.” Now, the Netherlands is going one step further: starting later this year, all 90,000 Dutch bankers will have to swear an oath that they’ll do their “utmost to maintain and promote confidence in the financial-services industry. So help me God.”
Half a decade has passed since the financial crisis, and yet the behemoth banks that caused economic chaos remain much as they were before – influential, opaque and potentially dangerous. It doesn’t have to be this way. Radical transparency could not only boost the industry, it could safeguard the economy. Forget “mark to market” and quarterly filings. Require every bank to report the value of its assets and liabilities on a daily basis. Don’t believe it can’t be done. Realize that it must be.
Big banks — at least in Europe — are putting on a new, highly branded, and more contrite face. Barclays is embarking on something it calls “Project Transform”’; Deutsche Bank has announced its “2015+” strategy and is pushing for what its CEO has called “deliberate” “uncomfortable change”. UBS has its own 2015 strategy, and the head of its investment banking unit publicly proclaimed that the industry has become “too arrogant, too self-convinced”.
A year ago the federal government and 49 states completed a $25 billion agreement with the nation’s largest mortgage servicers to settle claims of “robo-signing” and unlawful foreclosure practices. President Barack Obama announced the creation of the federal-state mortgage securities working group in his 2012 State of the Union address. The nation seemed on the verge of transforming the way banks treat struggling homeowners ‑ particularly those with “underwater” mortgages, in which a homeowner owes more than the house is worth.
By Simon Johnson
The opinions expressed are his own.
Participants in the Occupy Wall Street movement are right to argue that the big banks have never properly been investigated for the mortgage origination, aggregation, and securitization behavior that was central to the financial crisis – and to the loss of more than eight million jobs. But, thanks to the efforts of New York’s attorney general, Eric Schneiderman, and others, serious discussion has started in the United States about an out-of court mortgage settlement between state attorney generals and prominent financial-sector firms.
By Katrina Pugh
The opinions expressed are her own.
In the jitteriness over the stock market’s worst quarter in two years, a racing volatility index, and protests spreading across the nation’s major cities, all bank leadership (and perhaps all corporate leadership) needs to ask a fundamentally new question: “What blindspots are dogging us?” This hardly seems like a radical question. After all, most arbitrators make their money off of other people’s blindspots by seeing around corners where others can’t.