Far away across the pond, a very encouraging event has occurred. A government member of the banking community has spoken the heretical truth, that banking is not theology, and banks should share responsibility for the health of their economy.
While here we have such self-styled rockstars as Goldman Sachs’ Lloyd Blankfein doing the work of god by making profit the old fashioned way, cheating, Bank of England governor Mervyn King has called on his fellows that ‘failure to reform the sector could result in another financial crisis’.
His remarks come weeks after Chancellor George Osborne signed Project Merlin.
The deal agreed that in return for the banks lending more money and showing restraint on bonuses, the government would not take any more action on pay and profits.
Mr King said that, over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.
While we hear from our U.S. bankers that they are honor bound to serve the bottom line, some breakthrough is occurring in financial circles where wiser heads see the connection between economic disaster and fraudulent banking practices that brought it on.
Even in Great Britain, King has his detractors. Anyone who speaks against mega-profiteering as the sacred mission of bankers will be in the position of telling the public that the emperor is naked.
Without a process that allows equal access to income production, though, a society is going to suffer a retraction of its overall economic health. Even banks lose money when there isn’t sufficient wealth to deal with. The banking industry will do well to recognize that it, too, depends on consumers.
The simple truth will prevail, that without disposable income for the public at large, a consumer economy is damming, and damning, itself.