Never Were Any

The upcoming meeting this week between the International Monetary Fund and the World Bank is best described as an exercise of "whistling past the lonely graveyard" late at night.

In a post from today's Financial Times, "Global economic growth ‘sliding back into the morass,'" we get this carefully constructed language.

The annual meetings will encourage policymakers to pursue inclusive and faster global growth as international organisations, finance ministers and central bank governors seek to reassure the public they can co-operate and that they have the necessary tools to break five years of economic disappointments. 

Hanging over the meetings is the fear that the failure to improve living standards in advanced and emerging economies was important in the UK’s vote to leave the EU, may propel Donald Trump to the US presidency and will strengthen the hands of populists such as Marine Le Pen in France. 

Going into the meeting the Times is quoting a joint tracking index on global growth between the newspaper and the Brookings Institution that follows growth rates in the global economy. The article title speaks for itself. Inclusive and faster growth is always the same, code for ramping up fiscal spending another code term for solving nothing just kick the damn can the hell down the road to shut up all our critics. This damn kitchen is getting too hot. If we're not diligent this uproar will actually bring about some real meaningful change to our business-as-usual honey pot.

Don't say this out loud or you'll disturb the sleeping bureaucrats, Deutsche Bank's current morass is sine quo non. The bureaucratic monstrosity is just that, a monstrosity. Donald Trump, like the guy or otherwise, caught some hell for saying the system is rigged.  But as one Ft columnist wrote today, talking about DB: "The real eye opener is the absence of any executive from the charge sheet."

The columnist went on to say: Since the financial crisis, shareholders have borne the lion’s share of the cost of banks’ past misconduct. It has been a weighty burden on top of the requirement to put new money into often woefully undercapitalised institutions. Around the world, they have been stuck with penalties amounting to nearly $350bn.

They have certainly taken more pain than those who ran the largest banks. By and large, top executives have got off lightly. True, some have lost their jobs, or seen their wealth eroded because of the tumbling value of their stakes in their own institutions. But most have avoided sanction, hanging on to their professional credentials and much of their winnings. In a recent study of 156 criminal and civil actions brought against large banks by the US Department of Justice (DoJ), individual employees were identified and charged in just 19 per cent of those cases, according to analysis by the Wall Street Journal. In only one was a board level executive actually held to account.

No one questions that shareholders should have responsibility for the conduct of an enterprise — especially one with the economic significance of a big financial institution. Those who both have rights of control and a share in the fruits should bear the costs when things go awry. But it is striking how through the post-crisis period almost all penalties have fallen on the investors, and indeed continue to do so. Just look at the furore about the proposed settlement between the DoJ and Deutsche Bank. Most bank fines have ranged from the annoying to the painful. In this case, the DoJ went further: the $14bn it was apparently demanding — a startling four-fifths of Deutsche’s market capitalisation — actually raised questions about the bank’s ability to pay.
Even so, the real eye-opener was not so much the number (which is anyway likely to be negotiated and much smaller) as the absence of any bank executives from the charge sheet. One might have thought that malfeasance requiring such a level of restitution would at least have resulted in staff being pursued because of what they had done.

Not so. In fact not a single Deutsche employee was fingered for misconduct. And what is more, it has been virtually the same story with a host of settlements involving mortgage-backed securities. Several large US institutions, including JPMorgan, Bank of America and Goldman Sachs, have coughed up a cool $55bn. Yet with just a handful of exceptions, regulators haven’t found individual bank employees who committed prosecutable offences in the whole mortgage mess.
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As we said this is sine quo non. They need this to continue so they can continue running their shameful scams. Anyone think the CEO of Warren Buffett's favorite big bank,Wells Fargo, will see any jail time? And you can bet those Italian bankers right now, led by Matteo Renzi, are breathing a sigh of relief, mostly likely tilting a glass of their favorite wine with a toast or two: "Here's to all those austerity-driven German  freaks."

The globe is a very ugly place right now. And there are no saviors on the horizon for one good reason: There never were any.