Bad banking

Readers' Views No 295, Q2 2013
OECD Observer

The economic crisis has highlighted the lax economic regulations put in place in the banking sector, and your article reveals that deception and misconduct is still endorsed by some bankers ("Banking, ethics and good principles", OECD Observer No 294, Q1 2013).

Even more unsettling is how top bank executives and hedge-fund managers (the top 1% of the financial industry) still deal with their client companies' loans and investments. Since the deregulation of the financial sector was adopted, hedge-fund managers have been paid fees for managing their clients' money, and also a certain percentage of the ensuing profits. This has created greater incentives for hedge-fund managers to engage in extremely risky projects.

In light of the crisis and further scandals in the financial sector (including the manipulation of the LIBOR exchange) there is a collective consensus that reform in the current banking models is still needed. Too many agree that the current system of pay and bonuses are excessive, and badly attributed. Perhaps some of the top earners in the financial industry created products of high value, but there is still the justified belief that their salaries are inflated compared to their contributions to their company or the wider economy.

Capping bonuses to deter reckless bankers from taking risks detrimental to the taxpayer is the EU response, and this will come into effect in 2014. But will cities like London or Dublin, or indeed, Paris really play cricket and apply the caps? The OECD has long stressed that policymakers must regulate market failures. But as you point out, financial market companies still take up such a large chunk of the Dow Jones Industrial average. And as we know, it is no longer just that sector which is implicated. It involves the millions of financial users who rely on the health of banking; that is, society as a whole.

—Mikaela d’Angelo, London, UK


Comments and letters may be edited for publishing. Send your letters to observer@oecd.org or post your comments at these portals: www.oecdobserver.org, www.oecdinsights.org, or at the other OECD portals on this page. 

©OECD Observer No 295, Q2 2013




Economic data

GDP growth: +0.7% Q2 2017 year-on-year
Consumer price inflation: 2.3% Sept 2017 annual
Trade: +1.4% exp, +1.7% imp, Q2 2017
Unemployment: 5.7% Sept 2017
Last update: 14 Nov 2017

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • The annual OECD Eurasia Week takes place in Almaty, Kazakhstan 23-25 October. Writing in The Astana Times, OECD Secretary-General Angel Gurría urges Eurasia countries to stay the course on openness and international integration, which has brought prosperity but also disillusionment, notably regarding inequality. The OECD is working with this key region, and Mr Gurría urges Eurasia to focus on human capital and innovation to enhance productivity and people’s well-being. Read more.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2017