More than three years after taking the world to the brink of economic meltdown, banks remain heavily troubled. Instead of the rebound from losses that would normally have taken hold, they are now confronted with a rumbling debt crisis in Europe.
The crisis of legitimacy in capitalism has meanwhile spread since 2008, just as Occupy Wall Street has expanded from its original focus on bail-outs and bankers’ pay to a global reference point for the grievances of the “99 per cent”. Yet it was within banks where the crisis emerged and where its heart still lies.
Their troubles go beyond the financial. In the 1990s and 2000s, banks became a leading force in western economies. Their share of gross domestic product rose sharply; Wall Street banks such as Goldman Sachs extended their reach across Europe and Asia; the boundaries between commercial and investment banking were eroded, and bankers were highly rewarded and even regarded as glamorous.