Wednesday, October 05, 2016

Modern Finance Is In Trouble
"Anyone who has dealt with an investment bank the past few years will have experienced cross-selling first hand. Employees are trained to recommend customers with any apparent resources (assets or income) to one of the bank’s army of ‘advisors’ .. Cross-selling is the business model of today’s finance sector. It has been the motivation for merging different product and advisory firms since the 1990s when Glass Steagall (1933) divisions between deposit taking and product sales were eroded and then rescinded in 1999 .. The recent cross-selling stories bear a strong resemblance to the tactics that were common in investment banks leading up to the crash of 1929 .. For the last 25 years, we have born witness once more to the devolution of big finance into a protected class .. As lawmakers, regulators and central banks were enlisted to this cause, finance profits boomed in the greatest leveraging supercycle in human history. While asset prices soared, so did the commissions, fees and interest extracted by finance, while the financial stability of their customers and the real economy weakened .. Fresh models and thinking are needed to help workers and savers build and retain the proceeds of their labor into capital loaves that feed themselves, their beneficiaries and the real economy ahead of the bankers .. Our financial system is a critical utility and history proves that it is too important and vulnerable to allow a self-serving, sales driven culture to dominate it. Allowing finance to run wild has bankrupted the free world. If the real economy is to finally rebuild, we must stop worshiping and protecting these false prophets."
- Danielle Park
link here to the commentary

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