High finance has always been one of the most highly regarded and envied of professions and, for outsiders, by far and away the most intimidating.
Its history goes all the way back to the Renaissance in Italy and the rise of hyper-rich banking families like the Medici and, at the start of the 19th century, of the development of true international banking by the Rothschilds.
To be a banker or a financial investor has always been to be powerful, influential, wealthy, highly esteemed and assumed to be exceptionally smart as well as highly cultured (as was the case with the Medici and the Rothschilds).
Today, the status of the professions of banking and of financial management is nearer to that long occupied — most times quite unfairly so, in fact — by used car dealers.
A couple of weeks ago, a senior member of the august U.S. Federal Reserve Bank used the phrase “feral hogs” to describe the actions of some in the banking industry.
According to a retired Goldman Sachs vice-president, the managers of this financial company refer to their own clients as “muppets,” while the company’s corporate culture is, in his term, “toxic.”
Recently, the influential Economist magazine described as “rotten” the long-running Libor rate system by which a small group of international banks has long fixed the most influential of all rate systems, principally for their own corporate — and personal — benefit.
All these comments about an industry that for centuries has been treated with such reverence are highly unnerving.
By far and away the most savage criticism of all, though, has been made by a senior member of the industry itself.
During the crisis of 2008 that almost set off a global depression, Ireland’s condition was more desperate than that of any other country because of a bloated real-estate bubble caused by wild overlending by its banks.
To avoid a financial collapse, its government pledged to cover any losses by its banks.
The country’s largest bank, the Anglo-Irish, pulled together its senior executives to consider what should be done.
For some reason, this private session was taped. A few weeks ago, a copy of the recording was leaked to the press.
At that meeting, it now turns out, one senior executive was asked why Anglo-Irish had told the government its potential losses were some seven billion euros when in fact the true figure was 30 billion, or almost five times higher. The executive’s description of where the estimate had come from was, “I picked it out of my ass.”
After learning that they had successfully cheated the government, the Anglo-Irish executives then broke into a mocking chant of “Deutschland über alles” — or “Germany above all,” meaning that most of the money to bail out the bank would come from either German or Irish taxpayers.
If other tapes of other boardroom meetings staged by other banks in other countries were to be released by other whistleblowers — Canada is an exception, it must always be stated — it is certain, surely, that a great many other identical expressions of unrelieved arrogance and greed would now be on the public record.
One of the last comments made by Mervyn King before he retired as governor of the Bank of England (the post now held by Canada’s Mark Carney) was almost mournful. King said: “It is not in our national interest to have banks that are too big to fail, or too big to jail, or just too big.”
Since a half-decade has now passed since the near-disaster of 2008, King was saying, in effect, that almost nothing at all has changed.
It is this, rather than some bank executive bragging that he’d concocted estimates of losses “out of my ass,” that is the real scandal.
Richard Gwyn is national and international affairs columnist with The Toronto Star.
His email address is firstname.lastname@example.org.