Is There a Banker 'Witch Hunt'?

August 22, 2012 11:23 AM EDT
Look, the desire to tar and feather bankers and burn down the banks doesn't come out of the blue. It is a response to what many views as the unchecked greed of bankers and the systemic risk some fear banks create for the economy, not to mention anger at the culture of blatantly unfair business practices and trickery. So, why the rant? This rant is in response to a research note by Dick Bove titled the 'Witch Hunt Continues'.

In the report Bove complains about what he views as unfairness that "banks and bankers [are] being put under greater scrutiny than any other business possibly in the history of this country."

However, examples of unfair dealings at banks are a dime a dozen, and include robo-signing, the Libor scandal and other rate fixing, the London Whale story, etc., etc.. Most recently we have probes over potential violations of the Iranian embargo.

In response to increasing calls for more oversight, the SEC, FRB, OCC, FDIC have all beefed up efforts to regulate banks. Additionally banks and bankers have become the favorite whipping boy for zealous reporters throughout the globe. In short, the tide has finally turned in favor of the pee-ons of the world and against the evil forces of hegemony. This is nothing to complain about.

In fairness, Bove makes a decent argument for more even-handedness. After all, writes Bove, "it is unclear how many jobs are being created by these attacks." Bove also thinks the attacks will make bankers less willing to take risks to provide funds to grow the American economy. These are fair arguments. However, the fact remains that regulators are not creating bank scandals, and neither are members of the press. We are simply reporting on them.

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