Vigilance vital to banking these days
It seems that the old platitude that greed is good is, in reality, the philosophical leitmotif which guides some executives in the world's financial sector.
Recent events in the global financial centres have unfortunately cast bankers in a bad light.
In the past, fraud was confined to errant tellers and the occasional manager of a branch office. Today, the roll of dishonour includes some greedy traders and, more so, a few chief executive officers. It was the reckless speculation of a rogue trader that led to the implosion of the century-old Barings investment bank. Now the CEO of Barclays has had to resign.
Dishonesty is now a raging pandemic, from Bernie Madoff in the USA to Allen Stanford in Antigua and Barbuda.
The implosion of Lehman Brothers raised the global spectre of a wave of bank collapses such as occurred during the Great Depression. Bank failure is a regular occurrence in developed economies, such as in Europe, which for decades were regarded as the safest places to keep money.
The failure of financial institutions is still blamed on the dishonesty of individual bankers, but the lack of integrity is becoming an institutionalised culture in many states. It was not individuals, but banking institutions that colluded to pervert the operation of market forces in the determination of the LIBOR (London Inter-Bank Offered Rate). It was not a few cheating banks, but a widespread system involving the most respectable of them, such as Barclays.
Meanwhile, central banks snoozed in their hallowed halls and bank supervisors just did not understand it.
This laxity is extremely costly to the public because the governments have to use taxpayers' money, or worse, have to borrow money to prevent a domino effect leading to a financial debacle. Such disasters cause depositors to lose their life savings, investors their share value, and bank employees their jobs and pensions.
And it does not help to see, in the midst of this, CEOs getting enormous "golden parachutes".
The answer to the crisis of bank integrity is not to keep your money under your mattress. Governments everywhere, including the Government of Jamaica, must carry out regular comprehensive audits of all financial institutions, continuously improve bank supervision, maintain the most able regulators, and update financial legislation.
Vigilance must be the watchword for bankers, regulators and the public. Greed, of course, is not confined to bankers, it is the disease that causes so many to be gullible and often lose their fortune in Ponzi schemes.
Despite the actions of the greedy few, we believe that the majority of people working in the financial sector in Jamaica and worldwide are honest. In order to reclaim whatever public trust already lost, we have to guard financial systems and banks against those who succumb to rampant greed.