Self comment on the previous post

Maybe soemone who has read this blog carefully will obstruct my previous post that earlier I was no friend of banks and suddenly taking an issue on behalf of them can only be the expression of political bias. In order to clarify this (but not denying some political bias, anyway, why should a blogger be unbiased, it is supposedly a very personal genre) let me present my opinion. Firstly, banks are not persons, therefore they could not have virtues and vices and banks as such can hardly commit sins and deserve punishment. Any reference in texts claiming that banks has acted one way or the other is a simplification and a pars pro toto. Banks are instiutions managed by humans, and these humans obviously can be judged even for the morality of their handling of business. However, at the moment, In Hungary these humans should not fear any punishment, it is pardoxically reserved for non-person without the free will that is the basis of any moral judgement. Furthermore, these humans are defended, their income taxes (note I'm speaking of those who run these banks and not those who work at the local bank subsidiary in the cashier's desk) were cut and - implicitely, but logically - they are always included in that virtuous group of hard-working people who were obstructed in their work by the previous, progressive tax system - at least in the fantasy world of these politicians. So, if there is at all someone who deserves punishment it is not the instiution, but the humans.

Secondly, and it is in a way a logical consequence of the above outlined problem, banks as institution can hardly be substituted for anything else than banks, whatever name they will carry. If they were driven to excesses - as they surely were -, if their payment schemes encouraged reckless behavior and ever growing taking of risk through the innovation of new finacial means to distribute these risk around the world then they need regulation, better control. But this is not the same as recklessly punish them with enforcing on them huge losses. Someone malicious could even say that anyone, even the dumbest, can punish the banks but only a few clever can regulate them properly in order to avoid the recurrence of such excesses. Because the banks, be them the good, old family banks or the new investment empires are essential for the economy. The immediate effects of the credit crunch in 2008 (when the flow of capital was frozen in a moment and the economy stalled) and the visible effects of the present reluctance of banks to lend (slow growth, even in Hungary, 0% q-o-q, 1,5% y-o-y in the second quarter of this year after two quarters with y-o-y growth above 2%) prove this very basic truth. It was obvious from the start of the crisis that there will be losses and the main issue will be the distribution of these losses. Not only according to abstract ideas of justice and fairness but according to the very practical necessities of the economy. I was always in favor - not that my opinion would carry any weight in this issue - of strict regulation, limiting the bonus schemes of banks and brokerage houses, dividing banks into retail and investment ones etc. But - however painful it is for my moral and political convictions - I tried to be always aware of the fact that the banking system has to be put in order with the help of the public. Unfortunately not too much was done in this regard and even these meagre achievements were - at least in Hungary - undone by the new government.