Thursday, November 8, 2012

Illusion of unassailability leads to fresh outbreak of '‘mad banker disease

During the 1980s British bankers changed for the worse. Having spent most of the past three centuries as financial herbivores — solid, reliable and rational members of the community — they metamorphosed into wild, hungry carnivores. Fuelled by commissions, bonuses and greed, they started seeing their customers as fair game.

Once respectable institutions were transformed into globally ambitious financial supermarkets whose business models revolved around selling as many financial products and services — including stockbroking, pensions, insurance, mortgages, and estate agency — as they could to as many customers as possible. Rent gouging corporates and gambling on complex financial instruments that few of the bankers actually understood added to the chimera of success.