Stephen Foley: The bankers who couldn't stop dancing
Saturday 03 April 2010
US Outlook: If a quote distils the essence of the credit crisis, it is the one from the hapless Chuck Prince, chief executive of Citigroup, just weeks before the mortgage market began hurtling toward the basement in 2007. "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."
Bouncers escorted Mr Prince from the nightclub six months later, but we get an opportunity to hear more from him next week, when he is called before the Credit Crisis Inquiry Commission, the US body looking for lessons from the financial chaos. No doubt his quote will be thrown back at him more than a few times, but let's hope it is in the spirit of intelligent debate.
After all, what Mr Prince was saying was quite instructive. You've "got to" get up and dance. We know a lot about the greed of individual bankers, tempted to recklessness by the size of bonuses on offer. But we hear a lot less about the fear of executives at companies like Citigroup, UBS and Merrill Lynch, who jumped belatedly into the business of mortgage derivatives after seeing their swifter rivals raking it in.
Once a quarter, the heads of investment banks put themselves up for judgement by investors, comparing results to see who's up and who's down in the fight for market share on Wall Street. Don't discount the fear of falling behind, the fear of being ousted by shareholders angry that their investment is falling behind.
It is all very well aligning bankers' bonuses to the long-term consequences of their bets, and clawing back cash if they turn sour, but can we also talk about how to lengthen shareholders' time horizons, too?
Marvel has released the first teaser trailer a week early after it leaked online
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Couple die within 28 hours of each other after being married for 73 years
Ottawa shooting: Canadian soldier dies after being shot at National War Memorial – with one gunman killed inside parliament
Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Diwali 2014: What is the festival of lights and how is it celebrated around the world?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Residents should throw a street party and mix with immigrant neighbours, councils told
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...