Central bankers accused for crisis
Central bankers are being accused increasingly by Europeans of
causing the global financial market crisis, and are even catching up
with investment and commercial bankers in the blame stakes.
The knock to central bankers’ reputations is revealed in the latest
FT/Harris poll of European public opinion, which shows levels of blame
have risen significantly since the economic crisis intensified in the
last three months of 2008. It suggests central bankers may have to go on
the offensive to explain past actions - or be prepared to admit mistakes
were made.
Even investors who “shorted” stocks, hoping to profit from falling
prices, attracted less blame.
Rising support
The poll also showed widespread and rising support for capping pay
levels at banks that are under government control, and for a beefed-up
system for policing the financial system.
When it comes to distributing blame for the current crisis,
investment and commercial bankers continue to suffer most scorn,
according to the poll of adults in the European Union’s largest
economies. Some 82 per cent of Europeans believed they held “complete”
or “a lot of” responsibility.
That was up from 80 per cent when the same question was asked in
October, highlighting how private-sector banks are seen as having acted
recklessly in recent years - with devastating consequences.
But the comparable figures for central bankers show a larger
increase. The latest survey showed 74 per cent of Europeans believed
central bankers were entirely or largely responsible, up from 70 per
cent in October.
Disquiet about central bankers was evenly spread across the
continent, suggesting the world’s monetary authorities are seen as
complicit, with little distinction drawn between the European Central
Bank, the Bank of England or US Federal Reserve.
One explanation is that independent central banks were perceived as
largely responsible for controlling the world’s largest economies, but
are now also seen as having misjudged their strategies, for instance by
fuelling asset bubbles through low interest rates.
Policy mistakes
Last week, Sir John Gieve, the outgoing deputy governor of the Bank
of England, went further than counterparts across the continent in
openly admitting policy mistakes. He argued that the low rates set after
the downturn earlier this decade had “just stored up more trouble for
the future”. ECB policymakers have also admitted that interest rates may
have been held low for too long - but have hinted that they see the US
Fed as more to blame.
According to the so-called “Greenspan doctrine”, named after Alan
Greenspan, former Fed chairman, asset bubbles are hard to spot and even
if they are it is easier to mop up after the bubble has burst than to
try to prevent it.
Radical rethink
Europeans have little sympathy left for private sector bankers, who
they blame most for causing the global economic crisis, and believe the
financial system needs a radical rethink, according to the FT/Harris
poll.
The survey shows not only that commercial and investment bankers are
assumed to have largely caused the crisis, but that Europeans want banks
to play a less profit-orientated role in supporting economies. There was
strong support for the idea that banks should become more like Germany’s
public sector-controlled Sparkassen, or local savings banks, which are
more focused on serving local communities and industries.
Turned negative
Support for the idea was highest in Spain and Germany, where 85 per
cent and 83 per cent of those polled were “strongly” or “somewhat” in
favour. In the UK and US the corresponding figures were 81 per cent and
78 per cent.
Asked about their opinion of bankers, most Europeans said it had
deteriorated as a result of the crisis - with 78 per cent of the British
polled saying their views had turned more negative, higher than in the
US and the other European countries covered.
Support for stronger regulation of commercial banks was similarly
high, with more than 60 per cent of those polled in the UK and France
and more than 70 per cent of those in Germany, Spain and Italy in favour
of tougher policing of the sector by their governments. The FT/Harris
poll was conducted online among 6,237 adults in France, Germany, the UK,
Spain, Italy and the US from January 28 to February 5. Courtesy: FT.com
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