Page 12 - The Banks Summary (H)

Punitive action in the form of fines are ineffective. Wells
Fargo’s $185 million fine when set against its quarterly

earnings of $5.5 billion is peanuts. Even when fines are
substantially increased once they are paid they are

quickly forgotten e.g. for RBS etc. they are legacy items.

Additionally, the fines are against the organisation and

ultimately the shareholders but not the instigators –

individuals are rarely held responsible.

Perhaps if ethical practices were robust and enforceable

and where managers were held accountable the cycle of

corruption could be if not halted then diminished at the

policy element.

The Future

A truism might be that firms always do well before they
crash - that is the nature of a crash.

Stress test amongst large banks show that the banks are

robust and complying with the new regulatory landscape

developed since 2008. However, the question to ask may

be, how can the banks be made to work for the economy

rather than failing more easily due in part to the

regulation put in place?

For example, it may be argued that low interest rates,

austerity/recession, falling income, growth inequality, and

income inequality leads to lop-sided recovery where the

seeds of next financial crisis are brewing. Lending,

particularly on credit cards, has grown substantially.