Bankers are hardly babes in the woods, but it wouldn’t be too much of a stretch to say that 2008 was the year when financial services professionals lost their innocence. Mighty institutions and powerful executives not only fell from power but in many cases vanished altogether.
Adding to the disillusionment, it was unavoidably evident that these failures stemmed not only from the human traits of pride and greed, but also from fundamentally flawed business assumptions about markets, capital and risk.
Since those concepts might be said to be the very foundations of banking, it’s understandable that so many people in the industry are suffering from a kind of crisis of faith. The disillusionment, sorrow and confusion are no different from that of a seminary student who develops doubts about his or her religion, or a baseball fan who learns that a favorite player is taking steroids. Our assumptions about right and wrong, success and failure, smart and dumb are upended, leaving us not only angry about those who betrayed us, but also somewhat ashamed and discouraged at our own willingness to be sucked into the folly or deception.
Many years ago my honors thesis as a college undergraduate was an analysis of the crisis of faith in Victorian England — a time when long-standing religious and cultural beliefs were being challenged by developments such as the Industrial Revolution and the dissemination of the theory of evolution. I studied several prominent scholars, theologians and poets who all went through a very similar process, starting as passionate believers; then moving to doubt, despair and inertia; and finally emerging from that despair sadder but wiser, ready to engage the world again but generally with a skepticism and objectivity they had lacked before the crisis began.
This seems to me a pretty encouraging model for what could happen in banking. We all know that we’re in for some very tough months ahead of us as we deal with loss, recriminations and internal assessment. But many organizations, and the individuals who run them, should emerge from the crisis if not stronger then at least smarter about risk, decision making, competition, customer needs and business cycles. That would be a very good thing for the banking industry.
Good luck to all of us in 2009!