Page 65 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

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the Department of Justice and Deutsche Bank, whilst being suspiciously similar in size and timing to the European Parliament tax claim against Apple, is not necessarily politically motivated.
If it is, it would seem to be a once-o occurrence, rather than a persistent and pernicious undermining of the institution of banking as a private enterprise as is evidenced in the United States. Certainly, Deutsche Bank must feel somewhat singled out, but they are joining an elite group of US banks that have, for the past four years, been attacked under one piece of legislation or another, by either Federal or State agencies or both.
e Rationale for Oppressing Free-Market Banking
One may ask what possible argument there could be against the disciplining of banks in the United States. After all, they did cause the most severe economic distress globally since the Great Depression. ere are several responses to this. As a start: the banks were enabled to package mortgages and then to sell these packages as securities as investment-grade instruments through a combination of three socio-economic factors.
Firstly, politically, both Democrat and Republican leadership in the nineties and early 2000s had encouraged all Americans to own their own homes. is led to the advent of the aggressive mortgage broker such as Countrywide.
Secondly, there was a complete failure of regulatory oversight. ink only of the Gramm, Leach, Bliley Act, which eroded the remnants of the Glass-Steagall Act. Recall that it was this Act that had successfully separated deposit-taking institutions from investment banks after the Great Depression. e Gramm, Leach, Bliley Act was pushed through Congress under the tutelage of Larry Summers, who called it the Financial Modernization Act, who was at the time an economic advisor to Bill Clinton.
Whilst banks have been severely punished, the politicians, economists and regulators who augured in the age of excess that led to the Financial Crisis have come out well in comparison. At worst they have had to endure some embarrassing responses during Congressional hearings. At best they have walked away with book deals and paid-for speaking slots.
irdly, an entire industry, including media houses that owned and to this day still own the rating agencies have gone relatively unsullied over the past decade. is is in spite of being the actual institutions that were
“Whilst banks have been severely punished, the politicians, economists and regulators who augured in the age of excess that led to the Financial Crisis have come out well in comparison.”
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