While these pieces relate to America, our local banks are made of the same stuff, with the added teflon coating of a rudely robust economy and pathetically acquiescent Australian government and Australian populace.
Among the unfortunate legacies of the financial crisis of 2008 is a tendency among commentators to soft-pedal the outrage over what happened. In too many accounts, blame is considered impossible to assign given the complexities of modern-day finance. Those inclined to point fingers at Wall Street or Washington are frequently derided as innocents who do not grasp how the world really works.And nothing has changed:
The result is an apologia that goes something like this: Mistakes were made, despite the best intentions of financial professionals. Bankers lent too much money to poor people who never should have bought homes. Models used to measure risk broke down, and regulators were swamped. All of this was a shame, but accidents are a part of life, and an unavoidable part of the swashbuckling style of capitalism that has enriched Americans for generations.
Nonsense, Matt Taibbi says. In “Griftopia,” a relentlessly disturbing, penetrating exploration of the root causes of the trauma that upended economic security in millions of American homes, Taibbi argues that what unfolded was far from accidental. Rather, the nation suffered the equivalent of a hostile takeover of key areas of its commercial life by investment banking houses, while regulators and members of Congress abdicated their responsibilities either because they were influenced by campaign cash or because they believed the fairy tale that unsupervised markets always work best. The result, Taibbi asserts, was a thieves’ paradise — Griftopia.
Meanwhile, the derivatives market, born of a legitimate and transparent means by which farmers could protect their future earnings, and only later appropriated by the financial markets for more odious (and hugely profitable - and costly to the rest of us) reasons, remains firmly in the grips of the big American banks, and continues to operate behind opaque curtains. The smoke and mirrors financial market remains in tact, unbowed.The villains of the last crisis, he observes, are the same people now tasked with preventing the next one.“We live in an economy that is immensely complex, and we are completely at the mercy of the small group of people who understand it — who incidentally often happen to be the same people who built these wildly complex economic systems,” he writes. “We have to trust these people to do the right thing, but we can’t, because, well, they’re scum. Which is kind of a big problem, when you think about it.”
The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.No shit Sherlock. But then again, stating the obvious over and over and over again is proving to be fruitless.
Banks’ influence over this market, and over clearinghouses like the one this select group advises, has costly implications for businesses large and small ...
One former regulator warned against deferring to the banks. Theo Lubke, who until this fall oversaw the derivatives reforms at the Federal Reserve Bank of New York, said banks do not always think of the market as a whole as they help write rules.
“Fundamentally, the banks are not good at self-regulation,” Mr. Lubke said in a panel last March at Columbia University. “That’s not their expertise, that’s not their primary interest.”
Book review - Giftopia - Matt Taibbi
Secretive banking elite rules derivatives