The Peanut Gallery is Watching, Waiting

One of the most read, recent articles in the business section of UK newspaper, The Guardian, is by Will Hutton. In his piece, entitled, “Now we know the truth. The financial meltdown wasn’t a mistake – it was a con,” the writer gets down to business and baldly accuses banks of not mis-management, but fraud. This may not seem like something new in the last eighteen months, but it is. For most of us reading the press about ‘what went wrong’ in the credit crunch, banks seem to have used the excuse that ‘things got out of hand’ with yes, greedy investors, but these were mistakes that they have learned from; the naughty two-year-old that has repented.

But, over the last year, governments, regulators, legislators, and now the fraud squad are uncovering much more dirt than the banking sector is comfortable with. Madoff, it seems, was just the beginning. Now, CEO Lloyd Blankfein at Goldman Sachs is fighting new allegations that they profited from a bogus security sold to investors to the tune of $1bn. Blankfein is calling these charges ‘politically motivated’ and is quoted as saying they’ve ‘hurt America.’ Sheesh. Where do you begin? All this from a man who once described his bank as “doing God’s work.”

And, as mentioned above, this is just the tip of the iceberg. The ex-head of The Anglo Irish Bank has been charged with fraud, Iceland’s banks are being investigated by its government for the same, and Lehman Brothers has already been shown to be guilty of ‘balance sheet fiddling.’ What does this mean for the humble public? It means, I think, that the once blanket trust/ignorance that the hoi polloi had in an institution, be it governmental or financial is at the bottom of the well. The peanut gallery (us) is getting educated and will be demanding a great deal more from their banks in the future. The governments in the UK and US still seem meek in regards to implementing regulatory change – afraid to really rock the banking boat. What must be remembered is that they (the banks, the politicians) are supposed to be working for us, not themselves. The gold rush is over, and now stands the issue of accountability.