The ASB advert with Goldstein is a great reflection on the Wall Street Bankers view of their “world”. Goldstein’s boss reports “things have changed, I’ve moved down a few floors, and I can almost see people from here”. Have ASB recognized a fault in the banking system and in poking fun at it, recognized how far adrift some of the banking practices had got away from the desires and demands of Main street? There is no doubt that the further up the tower you get the further removed from reality you are. The inhabitants of these “Towers” see dots below and move lots of paper and figures but do not have a lot of contact with people. This was clearly demonstrated by the news this week when the Rural Bank of Scotland (RBS) reported a $5.5 billion loss, but also reported that they had continued to pay bonuses to top executives totaling $2 billion. This caused a gasp around the world, as to how a Bank could increase its losses by 36% by continuing to pay $2 billion of bonuses to executives who had already lost $3.5 billion.
Many in England will question how a nationalized institution like the RBS which has now posted the most appalling losses and had to be taken over by the British shareholder to avoid a major collapse in the financial market should allow its executives to make such a profit at the top end at the expense of the ordinary shareholder, taxpayer and main street business person. The shareholders have lost over 90% of the value of their shares in that company.
This is a clear signal to the free market that parts of the banking world have become isolated and removed because of their relatively unique situation of selling credit under a licence from the governments. Can you think of any other organization that pays such amazing bonuses to executives when the company has lost nearly 100% of its share value? I once stood on the top floor of the World Trade Centre before it was removed and tried to understand what the world looked like from 80 floors above Manhattan. It is not a real world up there. People are only dots moving round on the pavement, 80 floors down. Barack Obama echoed the dismay of many who have been appalled at the banking world carrying on their traditions as if nothing untoward has happened. He said this week “the bankers just don’t get it”. Perhaps a new law should be introduced making it mandatory for all bankers to occupy only ground floors. They might connect better with us then.
