RNW, 27 April 2011, by Philip Smet
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| (Photo: ANP) |
Leading Dutch economists have issued an urgent warning that banks are up to no good. And politicians are turning a blind eye.
“Restore the economy to the way it was before the crisis, then everything will be all right: I don’t believe it for a minute. That’s restoration politics – the approach of our government in The Hague. But that’s not we need in times like these.”
Herman Wijffels, ex-banker and former chairman of the Social and Economic Council of the Netherlands (SER), is highly critical of the Dutch banking sector which, in the aftermath of the financial crisis, has borrowed billions of euros from the state.
Mr Wijffels, currently an economics professor at Utrecht University, is equally critical of the politicians who distribute the funds. “If you look at current banking legislation, you’ll see that precious little has changed. The whole bonus system – in essence, a reward for risk-taking behaviour – is fully intact,” the economist said last night on a current affairs programme on national television.
“One big golf club”
Wijffels isn’t the only voice condemning Dutch bankers. Hans Schenk, Professor of Organisational Economics - also at the University of Utrecht - says the risk of a new crisis erupting is big, alarmingly so.
Mr Schenk thinks that banks, politicians and economic watchdogs in the Netherlands do not correct one another: “It’s one big golf club. If you look at how people swing backwards and forwards from government ministries to banks to supervisory bodies... That’s the problem in a small country where they come across each other on a daily basis and begin to believe in their own truth.”
Gambling with other people’s money
The Netherlands has a large financial sector, which operates internationally. But it seems that national agreements are not enough to keep the bankers on track. That’s why, last November, the so-called Basel III framework was endorsed to foster international cooperation on banking supervision. But, the banks aren’t happy about it, arguing that the demands relating to greater capital ratios will adversely affect profit margins.
A fresh banking crisis is threatening the Netherlands, warns Ewald Engelen, professor of Financial Economics at the University of Amsterdam. The financial system is vulnerable, which can have an overspill into the state’s finances.
“Banks have a savings section for the ordinary man on the street and for small businesses. And they have a ‘gambling’ section, where they’re constantly betting in various financial markets. The problem with that combination is that the state is basically the guarantor for the layman’s savings. If anything goes wrong with investments, the savings are used to absorb the financial shocks.”
Economists are calling for a clear-cut division between banking for individuals and banking for large businesses. They also say central banks must insist on greater capital ratios. New agreements are striving for a five to six percent buffer, but Arnoud Boot, advisor for the Dutch central bank, argues the ratio should exceed ten percent.
Second-hand car salesmen
Many opposition MPs have voiced their concern about Finance Minister Jan Kees de Jager’s failure to adopt measures that would ensure the financial crisis does not have a repeat performance. The economists say if it’s left up to the banks themselves, nothing will change.
“Here in Europe, unlike the US, bankers are often seen as distinguished people, while in fact they’re mere used car salesmen and should be treated with the same degree of suspicion,” says Professor Engelen.
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“ ….. Let me give it another name: It's an actual shift to a higher vibration of Human nature. "Kryon, that's impossible. Human nature is Human nature. We can't change it." Well, you've already begun it. You're starting to clean up your financial institutions worldwide. Did you notice? Dear ones, if anyone had ever told you 30 years ago that you were going to clean up your financial institutions, they would have laughed. For don't you know the way society works? Those who have the money win. Banks hold all the cards, and they are run by the those in high places. They are untouchable, since the government is often the same people! Well, why don't you tell them that today. Look around you, because something just happened. It's not working that way, is it? What would make the difference? Consciousness. A new paradigm. You can see it in the news…..”