The heady pre-crash days of 2007 were the last time bank CEOs emerged to tell an unsuspecting public that all was well. Within months, of course, banks and financial companies were falling like dominos and Western finance ministers were desperately looking for a means of preventing a financial meltdown. The solution they arrived at was, in effect, to sacrifice the public in order to save the banks. And underwritten by the central banks, and ultimately by future generations of taxpayers, the banks were able to get back to business as usual.
Earlier in the month, John Cryan, the CEO of Deutsche Bank had to publicly assure investors that despite posting a loss of £5.1 billion in 2015 (the first loss since 2008), all was well:
“We are focused on 2016 and continue to work hard to clear up our legacy issues. Restructuring work and investment in our platform will continue throughout the year… We know that periods of restructuring can be challenging. However, I’m confident that by continuing to implement our strategy in a disciplined manner, we can and will transform Deutsche Bank into a stronger, more efficient, and better run institution.”
Were this an issue for just one of the big banks, we might be able to relax. But according to Business Insider, all of the big global banks are experiencing similar problems and are seeking to “restructure” – i.e. sack people – in order to firefight the problem:
“It has been a brutal year for fixed-income traders. Morgan Stanley cut 25% of its fixed-income headcount, while Goldman Sachs said in January it would make adjustments to address the ‘cyclical and secular pressures’ in that business.
“The top 10 global banks have seen a 30% decrease in fixed-income front-office headcount and a 16% reduction in equities front-office staff since 2010.”
The question for the wider public is, “is this déjà vu all over again?” – And if so, can we be sure that the too big to fail banks have not become too big to save?