The title should probably be “why do we expect banker’s to be rich?” but brevity is something I am working on.
When I was a youngin’ my communities bankers were, well, prominent people. Financially, they were well-to-do, we would say. Were they rich? No, nobody thought that. You see, community bankers are technicians: they work the levers of systems designed by other people. They were paid well, because they had the opportunity to steal a great deal of money, so getting a really well paying job was a disincentive to robbing the bank through embezzlement. Then the banks figured out how to include computerized checks and barriers to prevent such things, they ceased to have marble edifices and brass accoutrements and older people in charge (I do not recall seeing a young banker as a youth, they were all old men, conveying a sense of stability and gravitas.) and then banks and savings and loan institutions all of a sudden had much younger people in charge, of course on much smaller salaries. But then we got our “banks” putting up Halloween decorations and the like, much more festive.
So, today community bankers aren’t expected to be rich … they are just technicians.
But investment bankers, now they were expected to be rich. When I was young, an investment banker invested funds from a pool they collected and to make sure they didn’t embezzle money, they had to make a sizeable contribution to the investment pool. They were gambling their own money as well as their partners and interested investors. This was a rich person’s game. And if an investment banker wasn’t rich or getting rich they were a walking billboard screaming “Failure!” because the lucrative investments they were supposed to be making were not all that good, apparently.
There were just a few investment bankers, ever since the great Depression made sure that the funds in community banks were not to be mingled with the funds in investment banks (hint: the Glass-Steagall Act of 1933). Well, a gift from Bill Clinton and the other neoconservatives in the Democratic Party (we starting to agree with the arch conservatives who call the party the Democrat Party, because it doesn’t seem very democratic) was the repeal of Glass-Steagall because, well, according to the then economic geniuses, we were all grown up and didn’t need the training wheels anymore. (Why is it that economists have a track record that makes weathermen look as accurate as sharpshooters and we pay any attention to them at all?)
Just about a decade after the repeal of Glass-Steagall, we got the Great Recession, courtesy of that repeal. And the perpetrators of the Two Trillion Dollar Debacle got away scot free (shush, politically correct people, the term has nothing to do with Scots or Scotland; look it up)! Not a one went to jail. In the savings and loan crisis in the 1980s, 3,000+ bankers were prosecuted and 10% went to jail. This time, not a one because, you see, bankers are supposed to be rich.
Rich bankers make political contributions and we can’t afford to offend them, because, well, they are rich.
Like the Black man in Dallas who decided it was time to even the score with the police (deplorable, yet understandable), I wonder when it is that people are going to decide there are too many rich bankers and it is time to cull the herd.