Sants wishes bankers had been more honest

 

Hector Sants, who recently quit as the UK's top financial regulator, said on Wednesday that he wished "bankers had been more honest".

Speaking at the Said Business School, Mr Sants - who was chief executive of the Financial Services Authority from July 2007 to July 2012, and was an investment banker for most of his career - said that he did not mean that most of them had deliberately lied to him and his colleagues.

But he said that many of them were routinely "self-delusional" about the risks they were running.

Sants was participating in a debate on trust in financial markets (in which I was also a panellist).

Among the reforms he wanted to see to restore trust was the abolition of what he called "revenue-related incentives", or pay for bankers that is directly linked to the revenues they generate - to eliminate temptations for them to engage in bonus-generating deals that could turn out to be toxic.

The new chief executive of Barclays, Antony Jenkins, recently announced that branch staff would no longer have their bonuses dependent on the volume of financial products they sell. But many bankers continue to be rewarded for sales rather than the quality of the relationship with customers.

Mr Sants also advocated a new code of practice for the industry.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this
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    Comment number 222.

    The solutions found to economic problems resolve around income and leveraging it into more income. Income was believed to be a finite resource but we may be changing that - which is entirely brilliant, possibly. Income is the problem and it is diversified and expanded to become a bigger problem, and so forth. It is no longer necessary to understand more than this.

  • rate this
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    Comment number 221.

    Bankers are human ( sorry but it's true ), if you are not only encouraged, but highly rewarded to sell anything to anyone, you will. Political entities encouraged the feeding of the boom years, cash ( debt ) on demand. Bankers took the blame, politico's now want banks to lend again, not surprisingly they aren't too keen. If you want bankers standing trial, what about some politicians as well.

  • rate this
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    Comment number 220.

    216 HfH
    I'm not sure which link of mine you read re Gesell, but a fixed money supply is not what is being suggested.Helmut Creutz in his modern take on the problem calls for a'circulating safeguarding' through a 'user fee' for money. Central banks will be better able to synchronise the amount of money with demand through steady circulation.
    The withholding without penalty only distorts interest.

  • rate this
    0

    Comment number 219.

    At last, perhaps you lot have realised that ET returns this summer.

  • rate this
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    Comment number 218.

    purple @215

    The tractors built a 100 years ago have rusted and are no longer in use (capital depreciation). However, the people that made those tractors learned how to make better tractors, better engines, better electrical circuits and better materials. Some of that knowledge is still in use. Individuals learn things by searching and this knowledge accumulates as a form of real capital.

  • rate this
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    Comment number 217.

    There are important lessons to learn from the immense effort invested in preventing serious deflations of inflations and it appears those lessons are at last being learnt and improved upon.

    It is only possible to solve a liquidity problem, by creating another one which is exponentially relevant. The exponent must derive from π√ of your currency for export as bonds and securities. Simple really

  • rate this
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    Comment number 216.

    A Seditious Malcontent @208
    Fixed money supply is deflationary because information in an economy is increasing. To maintain price stability, money has to match information growth. Quantity can be controlled by government tax/spend and demand for money can be controlled by price of monetary rent. For a system to work, quantity and price should be set automatically by demand that growth creates.

  • rate this
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    Comment number 215.

    #214 - Start a knowledge bank?

    Is deadly fraud a murder?

    Have we over-accumulated?

    Is an accumulation of knowledge over the longer term, venepuncture?

  • rate this
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    Comment number 214.

    Up2snuff @202
    The bit about savings is my least favourite part of Warren Mosler's 7 deadly frauds. If a person saves up to pay for training then they accumulate human capital and this investment creates growth because the person has become more efficient (at least as a general case). All real capital accumulation ultimately translates into an accumulation of knowledge over the longer term.

  • rate this
    0

    Comment number 213.

    209U2s The market would set the price for money, plenty businesses need it but banks dictate the terms if holding on to money carried a cost they would lend at what ever price they could get for it.I must stress again that after reform this would apply to cash & current accounts only. Saving would hold their purchasing power.
    210HfH Banks would be compelled to lend, it's all about passing the buck

  • rate this
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    Comment number 212.

    ZERO H - is a provocative place..:-) right http://www.zerohedge.com/contributed/2012-10-22/three-things-investors-dont-know-about-europe move right along now please.

    Is debt a big problem, for eg Germany with real dept to GDP over 200%. What does that mean? Imagine the debt is your mortgage - things aren't so bad.

    This is funny -http://www.zerohedge.com/news/feds-balance-end-2013-4-trillion

  • rate this
    0

    Comment number 211.

    @208 ASM
    Please keep on complaining. Some of us keep raising these issues with management & directors. If more do so, then hopefully things will improve. The BBC belongs to the nation, to the users!

    Comment has been prevented on Steffie's Blog today, the first Blog for nearly a week. Why?

  • rate this
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    Comment number 210.

    A Seditious Malcontent @183
    Would banks then exchange back to a central bank who exchanges back to government as the spender of last resort? Would the savings market change? In the current market investments require purchases which have high transaction costs for small savers. In practice this means that firms invest but people save. It's hegemony of the firm and freedom should be for people.

  • rate this
    0

    Comment number 209.

    @193 ASM
    I would challenge that.

    Real life, right now example: GO is suffering poor receipts at Treasury. If we had returned to proper price money, he would be getting tax from savers, tax from bankers bonuses and paying out less in benefits for Pension Support.

  • rate this
    0

    Comment number 208.

    206JfH
    Char limit.
    I can't even sign in on S.Flanders,P.Mason & N.Robinsons blogs. The BBC response was they are aware of the problem. It's been like that since July 2011. I seem to remember someone on here saying it was outsourced to ATOS, I may be wrong though.

    HtH by price problem are you referring to price stability.

  • rate this
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    Comment number 207.

    205.HtH

    The Free Money is rather holed beneath the water by the reality of real decision marking using money! I've created many businesses that are a mix of labour and capital & one always has to do the balancing act between labour & automation - the price of money is critical. I suppose he would need Free Labour as well as Free Money - then all evaluation tends to infinity & is impossible!

  • rate this
    0

    Comment number 206.

    193.A Sed. Mal.

    Of course the character limit is deliberately set by the BBC to prevent reasoned and informed discussion of economic matters. They did so as soon as the Chairman of Governors joined to protect the Tory Party/HM Treasury/BoE from the power of logical and rational debate - it can not be a coincidence that Lard Patten Joined & the 400 Character limit was imposed almost immediately!

  • rate this
    0

    Comment number 205.

    John_from_Hendon @180

    I don't think Gesell noticed the price problem. Central banking is a very poor price control system. The monetary system is based almost entirely on positive feedback. Quantity control is also viable via govt. spending and taxing. Transmission is important too. Control theory is needed for sound monetary design. Circuitists may eventually get this working.

  • rate this
    0

    Comment number 204.

    @SAtM
    Agreed - indeed it was probably (almost certainly?!) a contributory cause of where we are now.

    The new particular 'beast' was added to tertiary markets, egged on by AB/GB (+Treasury?), but without the necessary safeguards from several directions: BoE/FSA/ICAEW/LSE, etc.

  • rate this
    0

    Comment number 203.

    185.Jo Lim

    It is my understanding from those that have known him over the years that in essence, yes, you may well be right in your assertion. Indeed that was why he got the job in the first place!

 

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