The Libor Scandal: Is There Any Trust is Left in Banks and Banksters?

As of this post the Libor scandal has fallen out of the news while investigations into the long time fixing of interest rates continue. One of the best takes I’ve seen on the larger implications of this “greed, greed, greed makes me do illegal things” affair is by Simon Johnson in The Baseline Scenario blog in a post entitled “Lie-More As A Business Model.” One of the major take-aways:

Martin Wolf, senior economics columnist at the FT [Financial Times] and formerly a member of the UK’s Independent Banking Commission, sees to the core issue:

“banks, as presently constituted and managed, cannot be trusted to perform any publicly important function, against the perceived interests of their staff. Today’s banks represent the incarnation of profit-seeking behaviour taken to its logical limits, in which the only question asked by senior staff is not what is their duty or their responsibility, but what can they get away with.”

This matters because, “Trust is not an optional extra in banking, it is, as the salience of the word “credit” to this industry implies, of the essence.”

Click here for the full post at The Baseline Scenario.


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