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People and Politics Forum 23. 01. 2009

"Should bankers be punished for mismanagement?"


More information:

More risk, more profit - Should bankers be liable for their losses?

Germany's banking system continues to be shaken by the global economic crisis. The government in Berlin has decided to use taxpayers' money to support financial institutions and prevent their bankruptcy. Many of the problems in the banking industry are due to trade in high-risk securities where banks hoped to reap enormous profits. Now prosecutors have launched investigations into these deals, and public opinion is calling for bank managers to face punishment. But Germany's criminal law allows little room for hard sanctions.

Our Question is:

"Should bankers be punished for mismanagement?"

Monir Khan, in Bangladesh, is scathing:

"Bankers are fully liable for losses. Modern banking is only in their interest and for riches. They must be punished."

In Germany, Robert Ziegler takes a closer, hard look:

"Bankers should be held to the same standards other professionals are held to. Especially where banks invested into derivatives of complexity levels that were, and are, beyond the understanding of many professionals, let alone the general public, banks should be liable in general. Furthermore, the traders and their respective supervisors who made the deals, should be held personally liable, as should consultants who sold investments they did not understand themselves as being secure. If I consult a medical professional about health and he suggests that I take some supplements and those supplements end up making me sick, then the professional may be held as much liable as the supplement manufacturer. Why should it be any different with bankers and the financial sector? (...)"

Alexandra Burger, in Singapore, sees mistakes in the system:

"Managers are not the composers of the ‘works’ here, but rather the conductors. The challenges and tasks they face are becoming ever more complex, and it is therefore unacceptable that they should be making a limitless number of incalculable decisions. I, for one, believe that banks should be made answerable for the decisions they make."

In Finland, Herbert Fuchs is adamant:

"Bankers are allowed to get away with their misdeeds scot-free (...) while the average Joe is held to account for the most petty offences. One would expect that in a democracy, those who have erred to the disadvantage of others would take responsibility and answer to their clients for the mistakes they’ve made. And then the laws should be rewritten to ensure that banks cannot participate in shady financial dealings. Depending on the levels of misery inflicted, bankers should be forced to compensate their victims with funds raised from their own personal assets. It’s absurd to simply let them off the hook in what would amount to a license to foolish irresponsibility on the job."

Mustafa Alani, in Iraq, says:

"Before thinking about punishment , we should ask about the criteria of bankers' mismanagement ... We should detect first the real cause behind this mismanagement ."

Gerhard Seeger, in the Philippines, doesn't doubt the need for punishment:

"My answer is a resounding ‘yes’! The money with which bankers speculate does not belong to them. Of course they are expected to achieve returns on the investments they make, but they mustn’t allow themselves to be blinded by greed (...) rather, they should conduct themselves in a responsible manner, which means to check carefully the soundness of each investment they are considering. If the fail to conduct themselves in this manner, they should be held accountable and punished, at least for breach of trust. Under no circumstances should they be rewarded with a severance package or other form of compensation. This game has been going on for a long time and we are, no doubt, at the tip of the iceberg. If the law is making it more difficult to address these issues then the law needs to be changed. We can’t expect a perfect legal solution overnight, but the laws can be improved. It’s been done in other cases."

Helge Weyland, Argentinia, says bankers can't claim innocence:

"Bankers are trained and experienced professionals who know what their doing. They have not accidentally run a red light here...they sped up to rush through it, fully aware what the were doing and the consequences."

Hannelore Krause from Germany writes:

"Any doctor who commits medical malpractice is held accountable for it. Anyone who causes an accident has to face the consequences. Parents are liable for children who cause damages, and that’s why insurance is recommended. People without insurance have to pay up themselves. This principle should also be applied to bankers who, either through deliberate speculation or bad judgement, have lost millions, or even billions. If it were just in small coins, the financial institutions probably wouldn’t mind to cover the losses. In any case, bankers who’ve piled up immense debts should pay their dues by foregoing pay-offs and pension plans if they lose their jobs."

René Junghans from Brazil thinks so...

"Of course bankers need to take liability for their mistakes, especially if they were frivolous with their clients’ money, offered them bad securities, and made empty promises about making them lots of money. Some of these bankers knew they would never be able to pay their clients’ money back from the start. As with any business, the company needs to make itself liable for its clients, that’s the only way to build trust between business partners. Being lied to and betrayed from the start, losing savings and then being told: "Sorry, your money’s gone and don’t try and make me liable for it", that’s just not on."

The editorial staff of ‘People and Politics’ reserves the right to shorten letters received.