Resisting Reality

FT cites Douglas Flint, Chairperson of HSBC:

“… an observable and growing danger of disproportionate risk aversion creeping into decision-making in our businesses as individuals, facing uncertainty as to what may be criticised with hindsight and perceiving a zero tolerance of error, seek to protect themselves and the firm from future censure”.

There is unlikely to be much sympathy for the hassled and harried bankers, as he may like to portray them. If it was a subtle hint for regulators to back off, there was nothing subtle about it. It may even backfire. Banks brought it upon themselves. Given an opportunity to self-regulate in the new millennium, they botched it. Big time. Ethical behaviour is conspicuous by its absence even now.

Banks always made a huge song and dance of compliance. Holding training sessions, making attendance compulsory and asking every one to sign on the attendance register and take exams on the Compliance training, etc. while some of the colleagues were busy manipulating LIBOR, FX and Precious Metals Fixing.

Banks are still not introspecting enough. They have not understood that their time has come and gone. Strangely, his remarks reminded me of Chuck Prince’s ‘As long as the music is playing, everyone has to get up and dance’, made in summer 2008.

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2 thoughts on “Resisting Reality

  1. While your points are entirely valid and I agree, is it also possible that what the HSBC Chair says is valid? I’d think so now ..

    I was a bit too young perhaps and a lost less cynical but HSBC forged my signature and debited my account for an annual charge for a credit card that I never applied for and never received. Looking back, and with a generous bit of extrapolation, I can think that they were unscruplous then (I think RBI and SEBI in consumer / investor matters have generally been good). I personally think they are a relic of the past in culture – snooty, upper class British.

    A lot also depends on what is “acceptable” in the times. Control functions do push back, but in the grey areas (an no matter how much you regulate and legislate there will be grey areas), it ain’t not allowed, it is allowed :).

    A lot of people in banking have no job being there – all sides – bankers, auditors, regulators, sales people, etc. I have seen the dross up and close … That is all I can say …

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    1. Thank you, SPV. Keep ’em coming. All of us need to hear and read other perspectives too. Needless to add, our perspective are informed by our experiences – direct or vicarious. I have seen the SELL SIDE from the vantage point of being on the BUY SIDE for about 18 years. Then, I have also seen the so-called BUY SIDE actually turn SELL SIDE. Every tide eventually ebbs. The tide for the banking industry lasted for some ten to twenty years depending on when you date the starting time – in the 1980s or in the 1990s. I am talking primarily about Western financial institutions. Now, it is time for the retreat. Perhaps, it is systemically a good thing.

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