Rebuilding the banks;
Anonymous. The Economist. London: May 16, 2009. Vol. 391, Iss. 8631; pg. 43
Abstract (Summary)
Banking is the industry that failed. Banks are meant to allocate capital to businesses and consumers efficiently; instead, they ladled credit to anyone who wanted it. Banks are supposed to make money by skilfully managing the risk of transforming short-term debt into long-term loans; instead, they were undone by it. They are supposed to expedite the flow of credit through economies; instead, they ended up blocking it. The costs of this failure are massive. Despite public rage over bank bail-outs, the industry has also comprehensively failed its owners. The scale of wealth destruction for shareholders has been breathtaking.Employees have scarcely done better. The popular perception of bankers as Porsche-driving sociopaths obscures the fact that many of the industry's staff are modestly paid and sit in branches, information-technology departments and call-centres. Job losses in the industry have been savage. The pain is nowhere near over. With so much red ink still to be spilled, it may seem premature to ask, as this special report does, what the future of banking looks like.
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(Copyright 2009 The Economist Newspaper Ltd. All rights reserved.)
A tamer banking industry is already emerging from the debris of the old, failed one, says Andrew Palmer
BANKING is the industry that failed. Banks are meant to allocate capital to businesses and consumers efficiently; instead, they ladled credit to anyone who wanted it. Banks are supposed to make money by skilfully managing the risk of transforming short-term debt into long-term loans; instead, they were undone by it. They are supposed to expedite the flow of credit through economies; instead, they ended up blocking it.
The costs of this failure are massive. Frantic efforts by governments to save their...