I am following Davos 2013 in the news particularly the financiers and the banking leadership, how they think and if they are learning from their current mistakes and of the past. I am always interested in this topic for one the financial sector caused one of the biggest economic catastrophes in modern times which we are all suffering from and making genuine sacrifices. Secondly we need to understand and ensure that this never happens again. Finally my core business is to help to train bankers, assist them in developing themselves and in their careers therefore I need to continually feel abreast on what is going on in this sector.
I was particularly intrigued to listen to an interview by Lloyd Blankfien the CEO of Goldman Sachs, a ‘highly successful’ Investment Bank. (That is if you are of a mind-set that measures success in pure monetary terms) It is not often a CEO of a highly secretive investment bank comes forward to answer questions in front of the media. They are generally less inclined to do so perhaps it is a way of covering up their guilt in how they actually make money; who knows. Anyhow let me start by saying that to come forward like this is good news and is a good step with regard to a much needed transparency in this sector. This is a bank that employs 31.000 people with net profit of 7.5 Billion dollars for 2012.
In many ways I found this interview fascinating bearing in mind that fresh in our memories we have seen so many scandals, reckless behaviour and pay excesses led by some of the same people. Greg Smith and the ‘resignation letter and toxic culture.' ‘Bob Diamond Affair.’ ‘Pay excesses in the board room.’ ‘Libor rigging scandal.’ ‘Gambling with the public’s money.’ ‘Rogue traders’ ‘rewards for failure.’ I can go and on in what I would call this decadent era of our time.
‘How is it that you can justify a pay rise of $20 Million to your own pay last year when everyone else is still suffering the pain from the consequences of the financial crisis caused by banks such as yours?’ Asks Stephanie Flanders of the BBC. She is asking the right question and the public would want to know why. He did not answer it.
He continued. 'We help companies finance themselves and take on other institutions risk.’‘I live 98 % of my time worrying about the other 2% worst probabilities as that is what I am paid to do’ He said. ‘A lot of good things are happening.’ It reminds me of when he once said. ‘We are doing God’s work.’ Honestly his answers were very aloof and really and truly Joe Blogs out there will simply not comprehend what he is talking about. Even I was struggling to grasp the vagueness of what he was saying. Here was his chance to connect to the outside world and explain how and why the financial crisis occurred and what responsible banks such as his are doing about it to remedy and change the situation for the future with concrete internal examples. It is his duty to be answerable to the public. Now I understand why these people don’t often give interviews.
I am also aware that employees at Goldman’s have a strong worth ethic and are bright. I just hope the vast majority of them are honest, remain true to themselves and are not wasting their talent if they carry such responsibility in our economy as they say they do. In many ways I am saddened that this ‘influential’ leader just did not explain anything clearly to the public and made no effort whatsoever in trying to re-instil their trust who feel hurt and let down. We live in an age where a vast majority of us are desperately seeking moral personal leadership, courage, humility and a change of mind-set more so from such firms that have made large revenues through very poor codes of conduct and loss of individual values.
Let’s us give an example and a taste of the other end of the spectrum. Today in Belgium where I live (although I am British) there is a record number of bankruptcies, people struggle to make ends meet as a result of the financial crisis. It is very hard to get credit if you are small business. There is a social crisis looming. Honest and hardworking people feel insecure about their future. It is starting to kick in. These people will simply not understand what Lloyd Blankfein is talking about when we have turned a corner let alone understand what he is saying.
Honestly we are not safe yet, the Banks have not learnt yet and we are not out of the woods. The challenge is still out there where we must ask ourselves how that trust in the Banks can be re-instilled with their customers as well as with the general public and vice versa. Which areas can we show this and in what ways? Are we working purely for our own individual benefit or for the benefit our customers and society as a whole? And I am sorry to say Mr. Blankfein; be better prepared when faced with the question about your own pay (which is no doubt excessive and incomprehensible) whilst everyone else is paying the price of the financial crisis. On a more positive note in my last article about Antony Jenkins the CEO of Barclays; he hit the nail right on the head.