Rothschild on Regulation
Sunday Interview: Sir Evelyn de Rothschild: 'To be rather abrupt, I don't think there's been a great change since 2008' One of the great City veterans and scion of the financial dynasty, Sir Evelyn de Rothschild tells Andrew Cave why banking culture needs to be reformed if lenders are to regain public trust. Veteran investment banker Sir Evelyn Rothschild is far from convinced that enough is being done to transform the financial and regulatory landscape of the City, where he has worked for more than five decades. Britain's financial system stands at the threshold of what's being hailed as a historic year for regulation and governance but, frankly, Sir Evelyn de Rothschild has seen it all before. – UK Telegraph
Dominant Social Theme: We need a deluge of financial regulation.
Free-Market Analysis: Sir Evelyn de Rothschild is making points about one of his favorite topics in this just-released series of remarks. That topic is financial regulation.
Evelyn de Rothschild – surely one of the more powerful men in the world – is focused on financial regulation because that's how the power elite operates … via mercantilism. The larger and more powerful government is, the more controllable it is, from the top elites point of view.
Evelyn de Rothschild has been a quasi-regular on financial media promoting the idea that more regulation is needed since the financial crisis of 2008. Here is how the Telegraph puts it in the introduction to the interview:
In just over three months' time, the Financial Services Authority, blamed for failing to control the 2008 financial crisis, will be dismantled, with most of its regulatory powers transferred to two new bodies – the Prudential Regulation Authority and the Financial Conduct Authority.
There will also be a new Bank of England Financial Policy Committee, which will oversee all matters of financial stability. The aim is to empower authorities to look beyond "tick-box compliance" and foster a regulatory culture of judgment, expertise and proactive supervision.
However, veteran investment banker Sir Evelyn, 81, is far from convinced that enough is being done to transform the financial and regulatory landscape of the City, where he has worked for more than five decades.
Earlier this month, Sir Evelyn participated in a panel of experts put together by Tomorrow's Company, a well-known think tank. The remarks in the Telegraph article are drawn from his statements there. Here are some of them:
"To be rather abrupt, I don't think there's been a great change since 2008," he states. "I don't think that in certain countries in the West anything has changed very much.
"Bonuses are still being paid, people's attitude to making money is the same. Spreading the opportunity for others hasn't grown as fast as it should have.
"The excessive bonus culture as it is in banking now is quite a new thing. It's only really been like this since Big Bang back in 1986.
"People started to reward people through direct money exchanges. It's happened in every walk of life. Money has taken a big leap forward."
Sir Evelyn obviously disapproves of the current money culture. As usual, he is focused like a laser beam on the issue of financial regulation and how it is necessary to defuse a culture of greed that permeates London's City. Here's more:
"The change in technology in the last 40 years with the arrival of the computer and the internet has been terrifically supportive of the medical world and also supportive of the financial world," he says.
"But it can also be misused. A lot of action was done on the basis of a quick return, without really knowing what the investment was about."
The solution, he argues, has to involve a much greater prominence of ethical considerations and the principles needed to sustain them.
One such tenet, he says, is transparency, which has been driving many of the regulatory reforms proposed since the 2008 crisis.
However, Sir Evelyn also feels strongly that another principle is the participation of bankers in the companies they work for through ownership, rather than the City bonus culture that has developed over the past 25 years.
These last two comments are critical, in our view. We've written a good deal about the elite meme of "transparency." The idea is that government and private industry ought to be as transparent and accountable as possible. Of course, this benefits the powers-that-be who are not themselves transparent – and never shall be.
Additionally, Sir Evelyn wants bankers to take formal stakes in the companies they advise and transact for. Good Lord! This would actually further INCREASE the control of bankers over the rest of society. He's not finished, though.
"I personally believe that people should have stock in the businesses in which they are participating, in order to feel that they are part of the company, rather than looking forward to a 12-month bonus, which could make them leave rather than remain."
A final important point has to do with his concern that capitalism be increasingly "inclusive."
"Inclusive capitalism is a difficult subject and I could speak for a long time on it," he says. "But I think it's a reflection on where capitalism was intended [to go].
"Whether you're talking about Karl Marx or John Maynard Keynes, capitalism today has changed and I think inclusive capitalism is about giving a broader opportunity for people to participate."
Of course, from a market-based standpoint, the kind of capitalism that Sir Evelyn is referring to likely doesn't exist. It is evidently and obviously a power elite that controls central banks – and these central banks in turn fund the modern West with its bloated military-industrial complex, endless wars and cyclical ruin.
A few people at the top evidently and obviously run this massive monetary machine. They are the "controllers." To fix the world, remove monopoly central banking and give people a chance to compete on an even playing field.
Sir Evelyn wants to substitute government regulation for the competition of the Invisible Hand. Surely such an intelligent and powerful man should see this sort of system of increasingly intricate and overbearing regulations doesn't work.
And yet he continues to propose it with a fierce intensity.
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