Bankers Gone Wild: Time to throw a few in jail?

- July 30th, 2012

In last week’s edition of the New Yorker, James Surowiecki takes a look at the latest banking scandal — gaming the LIBOR rate which banks pay each other to borrow money — and I think his tone here is about right:


… if recent history has taught us anything, it’s that self-regulation doesn’t work in finance, and that worries about reputation are a weak deterrent to corporate malfeasance. To begin with, traders at a bank are typically rewarded according to how much money their trades make, not on whether they enhance the bank’s reputation. Bank C.E.O.s, meanwhile, are now paid so lavishly that even when they wreak havoc on a bank’s good name they can still walk away with immense amounts of money. What’s more, it’s not clear how good the market is at sniffing out and punishing bad behavior before serious damage is done. During the housing bubble, the stock prices of the banks that were making hundreds of billions of dollars in bad loans soared instead of falling. Once the crisis hit, the market did a great job of slamming the barn door. But it did nothing to stop the horses from escaping in the first place.

[Read the whole piece]

Meanwhile in Britain …

George Osborne, UK chancellor of the exchequer, has ordered that an independent review into the Libor scandal engulfing some of the world’s biggest banks be completed within weeks, paving the way for a swift introduction of reforms to the way interbank rates are set . . .

[Read the whole piece]

Categories: Economy

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1 comment

  1. Kenneth Yurchuk says:

    Long past time to jail the banksters. Will it happen? I doubt it.

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