Remember going to the bank as a child with your parents, the days when they would write checks or endorse documents with their signatures?
Remember those pens tethered to the counter with a little chain, like the ones that hang from most ceiling fans which we pull to change settings?
Those secured pens were safe, reliable and signified the theme and mentality of banking. Banks used to be that safe when it came to banking and their assets.
Despite childhood recollections, the finance and banking industry was evolving into something flashy and daring. The roller coaster that finance and banking became as a product of deregulation had enormous rises.
As we all know, roller coasters must come down, and even though that drop is usually exhilarating during a theme park ride, the same is not true for our economy and finance industry.
The downfall of finance, which began in the ’80s was the product of a new era of banking and finance.
It was an era in which soaring profits, derivative markets, loan-happy lenders and daring Wall Street investors were enjoying the ride.
A handful of astute economists were feeling a sour twisting in their stomachs. These economists warned against these soaring finance profits and increasing debt.
As the roller coaster that was our finance industry went up, debt rose equally.
Fast forwarding to where we are now – still in debt, still faced with rising unemployment and ready to leave the ‘theme park’ – we need to realize the era of banking that has left us so dazed is crucial to lead us into a new era.
Paul Krugman, a Nobel Prize – winning economist, realizes what went wrong, what we need to do and the importance of it all.
Raghuram Rajan, former chief economist of the International Monetary Fund, also warned about this era of exploding growth and wealth in finance. Rajan voiced his concern before our roller coaster economy plunged, and was ridiculed by others.
Evidence only proves his accuracy and notes the knowledge he holds.
Long time brilliant banking guru and problem-solver Felix Rohatyn has seen firsthand the evolution of banking.
He too predicted our current crisis. Unlike the others, he has a sound solution.
Krugman and Rohatyn note the need for a change in policy. A new draft is needed for a new era, in which we keep our money as secure and protected as those pens once were.
