We all know the big picture. Enormous amounts of public money are poured into the banking system to prevent its collapse. The resulting massive public debts trigger a squeeze on public services that hits the poorest hardest and results in job losses and reduced opportunities.
Of course we have to find a villain of the piece. And we point the finger at "bankers", an amorphous group of arrogant, overpaid men in sharp suits who couldn't care less about the impact of their activities, took our money, paid themselves big bonuses, and laughed.
There is truth in every caricature. And it is infinitely easier – and more gratifying – to bristle with moral superiority than to try to dig deeper. But if we want to prevent another financial crisis we will need to be more sophisticated in our approach. A single, one-dimensional villain will not do. We have to take a closer look at the many interlinked people and relationships within the system and work out why it is capable of delivering outcomes that serve most of us so poorly.
This series of articles will examine the behaviour of a range of individuals in the finance sector. The actions of each of these individuals are rational and often justifiable. But these actions all add up to a deeply flawed financial system that creates systemic risk and results in damage to society and the ecosystems we depend on.
Many of these people do not accept the need for change. Others recognise that the system delivers poor outcomes for others but serves their own self-interest so they don't want change. Others see that the system is failing and want to change it but feel powerless to act.
This series will unpick the motivations of a number of people playing important roles in the system including:
The customer who feels very little connection to his financial services provider, has very limited knowledge of the financial system, and just wants to have some confidence that the money he sets aside each month in his pension will give him enough to live on in his retirement.
The fund manager who is driven by a desire to achieve the best financial returns for her clients, is highly competitive and gets personal satisfaction from outperforming her peers.
The ambitious financial specialist whose job is to structure new financial products that will generate high returns and attract new clients: he is technically brilliant and feels that he should be rewarded for his skills.
The pension fund trustee, who feels that, in order to discharge his responsibility to the pension fund members, he must invest in line with objectives to maximise short-term returns.
The politician who hears the anger over the financial crisis but knows that shifting power away from the financial services sector could damage the fragile economy further, and who knows that bad regulation will be worse than none.
This is not a game of Cluedo. There is no single culprit , this is not a matter of "it was the trader in the Gherkin with a derivative" or "it was the politician in the Commons with the threat of low growth". In the series I hope to explore how ordinary, well-meaning people in each of these roles help to make the system unstable. And I hope this will help to identify how change might happen.
Alice Chapple is director of sustainable financial markets at Forum for the Future
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