Gillian Tett
40 μ£¥³¤ ¬μμ¬
trading desks that compete furiously with
one another. Regulators remain frag-
mented. Moreover, as Ãnance is being
disrupted by digital innovation, a new
challenge is arising: the ocials and
Ãnanciers who understand how money
works tend to sit in dierent govern-
ment agencies and bank departments
from those who understand cyberspace.
A new type o tribal fracture looms:
between techies and Ãnanciers.
Policymakers need to ask what Wall
Street’s mighty money machine exists
for in the Ãrst place. Should the Ãnan-
cial business exist primarily as an end
in itself, or should it be, as in the
original meaning o “Ãnance,” a means
to an end? Most people not working
in Ãnance would argue that the second
vision is self-evidently the desirable
one. Just think o the beloved Ãlm It’s a
Wonderful Life, in which the banker
played by Jimmy Stewart sees his
mission not as becoming fabulously rich
but as realizing the dreams oÊ his
community. When Ãnance becomes an
end in itself, the public is liable to
get angry. That’s one reason for the wave
o populism that has washed over the
globe since the crisis.
But does the United States really
know how to build a Ãnancial system that
is the servant, not the master, o the
economy? Sadly, the answer is probably
no; at present, it is hard to imagine
what this would even look like. No matter
what, however, i American Ãnanciers—
along with regulators, politicians,
and shareholders—wish to reduce the
odds o another crash and another
populist backlash, they would do well
to tape the original meanings o
“Ãnance,” “bank,” and “credit” to their
computer screens.∂composed o derivatives) have returned.
Asset prices are soaring, partly because
central banks have Áooded the system
with free money. Wall Street has lobbied
the Trump administration for a partial
rollback o the postcrisis reforms. ProÃts
have surged. And although pay in Ãnance
fell after 2008, it has since risen again,
particularly in the less regulated parts o
the business.
What’s more, American Ãnance now
looks resurgent on the global stage.
In Europe, U.S. banks’ would-be rivals
have been hobbled by bad government
policy decisions and a weak economy
in the eurozone. In Asia, the Chinese
banking giants are saddled with bad
loans, and Japan’s massive Ãnancial sector
is still grappling with a stagnant econ-
omy. Ironically, a drama that was “made
in America” has left American banks
more, rather than less, dominant.
Indeed, the biggest threat to Wall Street
today comes not from overseas com-
petitors but from domestic ones, as U.S.
technology companies have set their
sights on disrupting Ãnance.
It would be foolish to imagine that the
lessons o the crisis have been fully
learned. Today, as before, there is still a
tendency for investors to place too much
faith in practices they do not under-
stand. The only solution is to constantly
question the basis o the credit that
underpins credit markets. Just as there
was in 2007, there is still a temptation
to assume that culture does not matter
in the era o sophisticated, digitally
enabled Ãnance.
That is wrong. Banks and regulators
today are trying to do a better job o
joining up the dots when they look
at Ãnance. But tribalism has not disap-
peared. Wall Street banks still have