November 26, 2013
Yes, another bank scandal . . .wait, don’t yawn
Turns out there’s a word in German for the feeling that could set in five years after the financial crisis of 2008. No, it’s not schadenfreude (more on that soon), but weltschmerz, or world-weariness. The most recent example that triggered this feeling was the report on Monday that the Royal Bank of Scotland “forced business customers to default on loans so that the bank could charge higher fees or seize their properties and sell them.”
At one time this would have triggered outrage, but even for those who notice, this news has to take a number. There are plenty even more outrageous things vying for our attention, and the outrage meter is broken.
We need to resist this kind of seen-it-before-nothing-fazes-us attitude when we learn of yet another bank scandal. Additionally, any sense of schadenfreude, or enjoyment in the misery of others is equally unhelpful. Both emotions keep us stuck as mere observers reacting (or not reacting) to the symptoms of the problem.
Best to acknowledge why we feel this way and then work to change the status quo. There is much to be done that could structurally reform our financial system and make it safer than it is today, less prone to speculation and crashes that resulted in more than 5 million homes lost to foreclosure, persistent under-and-unemployment and a recovery that has benefit largely the upper echelon only.
Included on this list is the enactment of the bill championed by Senators Elizabeth Warren (D-MA) and John McCain (R-AZ) of the 21st Century Glass-Steagall Act. The preamble states that it’s mission is:
“To reduce risks to the financial system by limiting banks’ ability to engage in certain risky activities and limiting conflicts of interest, to reinstate certain Glass-Steagall Act protections that were repealed by the Gramm- Leach-Bliley Act, and for other purposes.”
In coming posts, I will explain what is in this legislation and how it is designed to remedy the years of deregulation that helped deliver the financial meltdown five years ago.
