A “Permanent State of Crisis”
Although banks have managed to stay out of the headlines for a while, there were several scandals which threw them back into the limelight. For instance, it was recently exposed that retail employees at Wells Fargo & Co (NYSE:WFC) opened millions of accounts and credit cards for customers without informing them.
The CEO of the company was hauled in front of Congress for committee hearings, where he was eviscerated by politicians on both sides of the aisle. Then it was revealed that U.S. regulators may charge Deutsche Bank AG (NYSE:DB) $14.0 billion for mortgage securities malpractice.
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What’s interesting is that people have come to expect this type of behavior from banks. A new survey issued by the Brunswick Group shows nearly three-quarters of people s expect this cycle of financial wrongdoing to continue. (Source: “Survey: Banks ‘in a permanent state of crisis,’” CNBC, October 6, 2016.)
The survey, which was drawn in April and again in September, found that 74% of people are worried about another economic disaster, courtesy of the financial sector. They believe this calamity could unfold sometime in the next five years, especially since most of those surveyed think the economy is far from healthy.
“The results indicate that banks remain in a permanent state of crisis, despite significant efforts by the sector to shed liabilities, increase capital buffers and reduce risk-taking,” said Brunswick.
About 58% of Americans and 68% of Germans believe the global economy is still hurting over the last recession. The cloud of 2008 looms large in their perspectives. Even though Congress and the media still have lower approval ratings than banks, there is general agreement that more regulation is required.
Banks, “are currently viewed as part of the establishment and therefore part of the problem,” Brunswick said. “Showing customers, investors, politicians and regulators that banks are accountable for their actions, committed to their customers and focused on providing solutions to the economic needs of individuals and the global economy will be critical in getting banks out of a perpetual state of crisis.” (Source: Ibid.)
