In the cases of Lehman, Merril Lynch, Freddy Mac, Fannie Mae, Enron, World Online, ING, Northern Rock and the many other financial institutions running into trouble, nothing illegal has happened. It is simply the case of investments turning the wrong way.
Since 2008, banks and other financial institutions have been in the centre of attention. This economic sector has seen several bankruptcies and bailouts, and a new one has been added to this list on February 1st: the Dutch bank SNS has been nationalised.
The majority of management has resigned but of course kept their bonuses and payments, as is indicated in their contracts. So far, nothing illegal has been found and therefore all requests of prosecution or paying back their bonuses because the bank went bankrupt should stop. Though public outrage is understandable and the public should keep this firm ground to ensure future actions by politicians. There are enormous government budget cuts, peoples’ lives being affected by those cuts directly while there are billions to spend on a failing bank. It would be stranger if people did not protest.
In this case,
but also in the case of Lehman, Merril Lynch, Freddy Mac, Fannie Mae, Enron,
World Online, ING, Northern Rock and the many other financial institutions
running into trouble, nothing illegal has happened. It is simply the case of
investments turning the wrong way. The size of these companies makes it
impossible for other banks to take their losses and compensate citizens for
their losses, as is guaranteed under law. Therefore, there is no other option
then government to step in and in essence that is a good thing! Nonetheless,
these bailouts are a huge burden on society and are difficult to explain to the
common citizen.
However, this is
not the way capitalism works. It cannot be that in case a major player runs
into trouble, society has to take the burden but profits should be kept to the
company and its shareholders. Risks should be rewarded, but failure has to be
felt by the risk takers as well. As these so called ‘system banks’, which are
‘too big to fail’, have to be supported by governments, there should be some
kind of repercussion on the people responsible for the mess. As we all know,
public money has to be accounted for. The problem is of course, as long as
nothing illegal has happened, a person cannot be held responsible on the
individual level and this is a good thing. However, the bankers do receive
their payments on their individual efforts, so there should be ways to hold
them accountable at the moment public resource are involved. Not only to
punish, but also to learn (for citizens, central banks, politicians but also
future bankers).
In the case of
the bankers of these enormous financial empires, the CEOs and other high
ranking personal usually do not invest and risk their own money. They play with
savings, retirement funds, and mortgages. These are money from common citizens
who trust the banks to take good care of it. Hence, losing enormous amounts of
money, resulting in lower retirement payments or losing savings can endanger
the livelihoods of people who have nothing to do with the mistakes. I think
that such a clause should be included in our legal systems: taking risks which
leads to endangering, directly or indirectly, the financial security of
individuals or society. Take into account that such clauses exist for murder:
involuntary manslaughter. Although the
individual did not intend to kill another person, the actions did lead to the death
of another human being.
I am not calling
for ‘honorary suicides’ or public execution or harsh penalties on the banking
sector. I am advocating for bringing employees of banks which needed public money
to be hold accountable in court for endangering the financial health of many of
their fellow citizens. These citizens do not understand the complexity of the
financial world and could not oversee the situation. I want explanations,
clarifications, to understand their roles, in order to never see this happen
again, to learn, to reconcile, but also for banks to regain trust from society
which is desperately needed. It cannot be that profits are privatised while
losses are socialised without accountability from the people responsible.
Accountability is the first step to regaining trust.
Hence, I applaud
the American government, who sue the credit rating agency Standard and Poor’s,
for 5 billion dollars for its role in approving all kind of financial
instruments leading to the financial crisis starting in 2008. This is a step
all governments should take. I invite our Minister of Finance, also president
of the Eurogroep, to follow the bold step of the Americans, and let the courts
decide if the banks are to blame.
http://online.wsj.com/article/SB10001424127887324445904578285802822704578.html
http://en.wikipedia.org/wiki/Manslaughter#Involuntary_manslaughter
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