15 September 2011

Thinking Paper #102 - Should bankers stop being so reckless?

By Tim Massingberd-James

Abstract

As news emerges that a rogue trader at Swiss banking giant UBS has racked up unauthorised losses of £1.3bn, the IIPBA asks whether bankers should, just for a moment, think about real people and their hopes and dreams.



Should bankers stop being so reckless?

Here at the IIPBA, we obviously reject cumbersome bureaucratic regulation of the banks, but they don't half push our commitment sometimes. As we learned that this Swiss chap had apparently spaffed another two billion dollars against the wall we were a bit miffed.

We're sure you've met a British banker, and they are simple-minded folks. They mostly just stare at spreadsheets until, one night at the local champagne bar, one of the bosses realises that they know the father of a spreadsheet grunt, or he went to the same school as them. At that point, they are given access to unlimited money to gamble with all day.

The Swiss can't be much different, and we're not exactly angry at them, we're just disappointed. Of course, they'll pretend that what they're doing is jolly important and beyond our understanding but it really isn't. It basically boils down to:
  1. People give the banks all their money
  2. The banks lends half to people in need of money at high interest rate
  3. The banks gamble the other half in world's largest casino based on tenuous leads in financial newspapers.
The worrying thing is that most bankers can't even read.

Conclusion

Of course they should stop being so reckless. They should focus more of their business on lending the money to people and asking them to pay slightly more to get it back. At least you can reposess a two bed semi. You can't do that with a £1.3 billion hole in the stock market.

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