The latest scandal comes from London, where several large banks are being investigated for manipulating the price at which they borrow money, in attempt to make themselves look financially healthier than they actually were. You can get the gist of the scandal from this article in the EconoMonitor. What caught my eye were these of quotes about the banking industry:
It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal. — Mervyn King, Governor of the Bank of England
Investment banking is an organised scam masquerading as a business. It is defined by endemic conflicts of interest, systemic amoral behaviour and extreme avarice. — Will Hutton, The Guardian
We are told repeatedly that when Wall Street’s deeply flawed incentive system leads to one bad outcome after another, year after year, it will never happen again. Yet it does. ... For some reason, Wall Street never seems to get the message that bribing government officials — and paying each other off — to get access to lucrative municipal-bond underwriting business is illegal. Wall Street has never learned this lesson because the miniscule price it ends up having to pay for misbehaving has absolutely no deterrent value whatsoever. — William Cohan, Bloomberg NewsThe failure to go after the crooks in the banking and mortgage industries stems, in my view, from a pervasive belief in certain circles that public disgrace — coupled with massive fines — is a severe enough punishment and deterrent. You see this in the military as well. It's okay to throw the lower-ranking miscreants into the slammer, but the generals and CEO's get off with a slap on their public reputations and maybe a hit to the wallet. From My Lai to Wall Street, the story never changes. The little guys take the fall, while the big boys take a walk. Until that changes, public faith in our institutions — both public and private — will never fully be restored.