Last of the Cowboy Bankers

I’m struck by the newfound transparency that many financial institutions are forced to embrace, since the sub-prime fiasco began. Now, if you’re a businessman or an economics major, or even a very attuned political aficionado, what governments and investment banks and hedge funds do – isn’t a surprise. But, the intricacies of how we got into the current financial mess are truly complex for the layman and certainly for most of Joe Public. What the last eighteen months has provided for the average man on the street is an education in what ‘those guys’ (meaning banks, and governments) do. And much of it has been quite scary, indeed.

I’m reminded of this fact by the current quagmire Goldman Sachs has found itself in. Besides being the most successful investment bank on the planet, they were also at the epicenter of public outrage when the government bail-outs began. Now, they’re being investigated for slippery dealings with the Greek government. It seems Goldman helped the country with some ‘creative’ accounting by hiding the country’s debt so they could join the European single currency in 2001. Although these maneuvers were legal, one gets the sense that the press, and certainly the public is much more savvy at smelling a rat in the banking industry because the trust (if it was ever there) the public once had, has been completely eroded.

Lloyd Blankfein, Goldman’s Chief Executive Apologises

It’s unimaginable that the heads of corporate banks like Barclays, and Goldman Sachs, would some how be apologizing to the public for being naughty several years ago. Now, it’s occurring daily. Lloyd Blankfein, Goldman’s Chief Executive, recently said, “We participated in things that were clearly wrong and have reason to regret. We apologise.” Well, as anyone who has a therapist (or has witnessed an AA meeting) can tell you, recognizing and admitting something is wrong is the first step to recovery. To follow up, Blankfein said he would be pledging $500m to help small businesses in the US. Clearly, the heat is still on for the big money players, and the constant refrain of ‘the public is watching’ will still being ringing in their collective ears for quite some time to come.