We won't always need the banks so much
Monday November 09 2009
THERE'S a new mood abroad and the national conversation is shifting slightly. After a year of confusion, anger and analysis, both the observers and the public are beginning to look for answers.
Perhaps one of the most obvious signs of this turnaround came last week when more than 1,200 people dug into their own pockets to attend the 'Four Angry Men' event at the National Concert Hall.
While the four self-styled angry men, Shane Ross, Matt Cooper, Pat Leahy and Fintan O'Toole, gave skillful and interesting explanations of how we got here, the main focus of the question-and-answer session was, where do we go next?
It was much the same at a very different event in the Four Seasons hotel the next morning where a much smaller and less passionate crowd gathered to listen to the likes of the 'Financial Times' commentator Martin Wolf and economists Willem Buiter and Nouriel Roubini discuss how we got into the mess we're in and what we should do to get out again.
The banks are conspicuous by their absence in this important debate. While most of them have made public acts of contrition, they have been silent on how best to avoid a repeat of the past two years. While accepting the need for more regulation, they have all adopted a 'Not In My Back Yard' approach to new rules.
Finance Minister Brian Lenihan has made it obvious that he distrusts the financial establishment that lied to him about the severity of the banking sector's woes 14 months ago. Mr Lenihan has appointed outsiders to every position that has fallen vacant in recent times because he knows that Ireland's reputation depends on destroying the largely correct perception that the banking sector was brought down by a cartel of bankers and regulators who golf together, party together and set one another's pay when they sit on boards together.
It is clear now that banking won't be the same for a generation at least. Bankers no longer enjoy public trust or respect.
Bankers have previously been able to lobby governments while most of the public remained largely indifferent to the role of banks. The fact that banks paid a lot of taxes made it difficult for governments to ignore their lobbying but this is no longer the case. Governments don't see the banks as a pillar of society anymore but rather as a massive headache.
The left's traditional distrust of banks has been raised to fever pitch as services are cut to help bail out banks, and the right's belief in free markets and capitalism has been put under pressure by the banks which sought social welfare for themselves and threw many of their customers to the wolves. The banks are friendless and this is not likely to change anytime soon.
The banks' greed, society's bloodlust and the very genuine need for real changes to the regulatory system could conspire to create a populist form of revanchism. That, unfortunately, is a very real danger for any institution when it is so reviled. We must guard fiercely against it but equally society must not be timid when it comes to imagining the future of banking or life itself.
Banks have played an important role in European history since the early modern period when Shakespeare wrote the first of many plays about bankers with his 'Merchant of Venice'. But public hangings, sail boats and steam engines have all been part of our culture for centuries although we now happily dispense with them. It is almost certain individual banks and the banking sector as a whole will be smaller in future.
The interesting question is by how much? One of the speakers at the Four Seasons conference suggested we might do away with banking entirely.
That seems unlikely but a society that does not depend on credit, a society that is severely deleveraged, seems much more likely now. And a society like that will have far less use for banks than we do today.
Irish Independent
