The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

188 10 Disturbance of the Invisible Hand
behavior can only be criminal in extreme situations. 63 This is a valid legal argument,
but not an ethical one. In terms of business ethics, the fact remains that almost
the entire finance industry had become accustomed to forms of behavior which no
longer served the purpose of the financial industry, only that of the brazen, unbridled
enrichment of financial actors. Furthermore, rather than the taxpayer, it is the
financiers at the helm of the industry who failed to prevent the debacle as a whole but
it is the taxpayer who must now pay compensation for the damage done to the economy.
Liability for the damage caused by the financial crisis must also take the form
of repaying the state support and paying interest on the state loans and guarantees
taken out at the time.
The financial system can only be preserved if each one of its attributes that
became a cause of the financial market crisis can be modified. Among these
attributes are the development of hyper-speculation, the upsurge in derivatives
wagers, the excessive bonuses, and the inversion of the shareholder-value principle
from a control to an ultimate-end principle of the firm. Nothing compels Western
societies to cling to these attributes of hyper-finance capitalism, and nothing stops
financial intermediaries from acting in accordance with the laws of simple morality
once again, e.g. that when one enters into a fiduciary contract, one must also fulfill
the fiduciary duty. The described attributes of hyper-finance capitalism, including
neglect of the fiduciary duty, are not necessary attributes of capitalism. Capitalism
will still function with that degree of speculation that is necessary to maintain
financial market liquidity, and with the expedient level of derivatives betting that
is necessary for hedging. It will function with normal employment contracts instead
of with bonus systems, and with the shareholder-value principle as a principle of
control instead of an ultimate end in itself.
The hyper-finance capitalism of the period before the financial market crisis was
a kind of impostor capitalism. Like all impostors, it made the most of its opportunities
until time was called on the charade. The astonishing thing about the time
before the financial crisis was that almost everybody was better off for the duration;
or more precisely, everyone felt better off than they had been in periods of normal
capitalism. Since the 1990s, there was a kind of impostor economy – and parts of
the banks were worse impostors than most, that is all. When the first bubble burst
in 2002, it would not have been unreasonable to have thought: “Okay, that was that;
now things have to change.” But then the ingenious US Federal Reserve chief Alan
Greenspan arrived on the scene, evaded the recession and inflated the next bubble –
which inevitably burst.
63 More important than penal prosecution is the personal, civil liability of those responsible for the
bankruptcies of the financial institutions. Cf. also ROGER PARLOFF: “Wall Street: It’s Payback
Time,” Fortune, January 19, 2009, pp. 37–45, here p. 45: “Criminality is about deviance, so the
more widespread undesirable conduct turns out to have been, the harder it is to treat it as criminal.”