Reading the latest news about the behaviour of Barclays Bank employees in the City (following up on the misselling of PPI plans to the tune of £1.3 billion by their high street colleagues and the ‘aggressive tax avoidance’ the bank practiced until stopped by the government, at a saving of £500m for the taxpayer) sent me back to Charles Kindelberger’s Manias, Panic and Crashes: A History of Financial Crises. He writes:
“The forms of financial felony are legion. In addition to outright stealing, misrepresentation, and lying, there are many practices close to the line.”
As he notes, bubbles themselves can be swindles. The line between irrational exuberance and immoral swindling is fuzzy.
Kindelberger notes that a traditional punishment for financial crime involved sewing the miscreant in a sack with a wild creature (snake, monkey, wildcat etc) and throwing it into a river. This, he notes, seems excessive. Nevertheless, the emergence of the extent and scale of crime during the preceding boom marks an important turning point in the cycle, the book says.
“The curtain rises on revulsion, and perhaps discredit.”
No ‘perhaps’ about it, I would say. It really is time for the financial sector to rejoin the same moral universe as the rest of us.
A PS: for those who haven’t yet come across it online, there is a terrific chart showing a history of financial crises. A friend who knows me well sent me one as a gift – it is a terrific present for anyone of the anorak tendency.