Robert Peston on the Banksters




BBC New 30 January 2010


It seems timely to resurrect this Americanism from the 1930s - one of many evocative words the United States has contributed to the English language, says Harold Evans.


Americans are pretty good at adding words to the English language. We owe them pin-up girls, highbrows, killjoys, stooges, hobos, drop-outs, shills, bobby-soxers, hijackers, do-gooders and hitchhikers who thumb a ride.


The Americanisms are so much more concise and vivid. Instead of saying "sorry we're late but drivers ahead of us slowed us down when they craned their necks to look at a crash" you can say "we were held up by rubberneckers".


Words pop in and out of our language as social conditions change. The American gangster, which is still with us, has been around as a noun and a reality since 1896 according to my Shorter Oxford, but it seems to have dropped another Americanism from the 1930s and I think now is the time to revive it.


The word is bankster, derived by a marriage of banker and gangster.


It was coined, as far as I can deduce, by an American immigrant, a fiery Sicilian-born lawyer by the name of Ferdinand Pecora. He was the chief counsel to the US Senate Committee on Banking set up in the early 30s to probe the origins of the Crash of 1929.


He exposed quite a lot of the Wall Street practices that Harvard's Professor William Z Ripley had condemned in 1928. The believable Ripley called them - get ready for these Americanisms - "prestidigitation, double-shuffling, honey-fugling, hornswoggling and skullduggery".


The professor had vainly tried to warn President Calvin Coolidge that Wall Street was full of gas and was bound to blow up. To great discomfort all round, Pecora identified Coolidge himself, by then out of office, as one of those who'd been in on the honey-fugling.


The great banking house of JP Morgan had the president on a "preferred list" by which the bank's influential friends were given a chance to buy stock at half price. Shall we say, they made out like bandits?


Today the term bankster perfectly fits Bernard Madoff, whose crooked Ponzi scheme lost $50 billion of what the trade calls OPM - other people's money - invested with him.


Today the term bankster perfectly fits Bernard Madoff, whose crooked Ponzi scheme lost $50 billion of what the trade calls OPM - other people's money - invested with him.


Costly rug


But the revelations come thick and fast. People are now struggling for words to describe the latest example of Wall St's money madness. The fabled investment bank Merrill Lynch, run by one John Thain, had so many big zeroes on its balance sheet it would have been liquidated in December but for a merger with the Bank of America.


That was actually a shotgun marriage - in the US vernacular - since the Bank of America was forced to take billions of government money when it learned later that Merrill Lynch was down another $15bn. Then what? In the few days in December while he was still in charge, Mr Thain reportedly spent nearly $4bn on staff bonuses. That's peanuts on Wall St. In 2007 Mr Thain himself received $83m.


But a week ago, CNBC's Charles Gasparino, in a detailed scoop on the Daily Beast website revealed that during the time Mr Thain was busy cost-cutting, he spent $1.1m doing up his office - $86,000 for a rug, $35,000 for something called a commode on legs.


Readers bayed for blood, posting comments such as: "Oh how I wish this was Revolutionary France and we peasants could storm the offices…"


The anger about the greed that got us into our mess is, in my view, wholly justified. And now we hear that 10 of the big banks that got $148bn from Uncle Sam so they could make loans to get things humming again have actually reduced their loan totals by $46bn.


Mr Thain now is history, having resigned, but the great Bank of America, the biggest in the US and maybe the world is now on the list of banks that may have to be nationalised - a word no red-blooded American ever thought would be uttered in the land of enterprise.


Banksterism - Sir Josiah tells it like it is  


Sir Josiah Stamp's, president of the Bank of England and the second richest man in Britain in the 1920s, spoke at the University of Texas in 1927.


"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the Earth. Take it away from them but leave them the power to create money, and with a flick of a pen, they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."



Cast your mind back to 2008 when the world economy seemed on the edge of collapse. Bankers had their bowls out begging to be saved, government’s borrowing money from our pension funds and using the power of money creation filled them up. This is the reward the bankers have given themselves for the biggest con trick in history, £7bn in bonuses.



This spring City bankers are expected to see their bonuses rise to almost £7 billion following a "bumper year" for financial companies, economists predicted. The amount bankers take home is expected to rise despite the new 50 per cent tax rate on pay over £150,000. The majority of City workers will take home more money this year than last, according to research by the Centre for Economics and Business Research. The breakeven point is an income of £300,000, above which workers take home less pay due to the new higher take rate, it said. It comes after official figures revealed earlier this week that unemployment in the wider economy reached a 16-year high of 2.5 million.

Just when you think it couldn’t get worse news then arrives of Goldman Sach’s bonuses. Goldman Sach's bankers are on track to share in a bumper $20bn pay and bonus pot after the investment bank reported a 65% rise in second-quarter profits despite the global recession.



The bank, which has about 6,000 UK staff, is set to pay out record sums to employees just months after repaying $10bn of US Treasury capital and having suffered its first loss in nine years at the end of 2008.

Yet according to the United Nations Department of Economic and Social Affairs' (UNDESA) report, the World Economic Situation and Prospects 2010, 47 million more people globally became poor or remained in poverty in 2009 than would have been the case at 2008 growth rates, and 84 million more than would have poor at 2004-7 growth rates. Of these, 19 and 40 million respectively are in south Asia.

Times on Line

It’s clear then while bankers feast on their bonuses the rest of the world got poorer and more excluded, our public services, jobs and pensions were targeted to help pay for the bankers bailout and the recession they caused. Is this due to human greed of bankers? No, of course not, bankers continue to grow rich because they have power to create money out of thin air.

I will be shortly sending out a timetable and advice on voting at the UK banking sector AGMs. Hopefully we can get our funds to vote against the pay reports!

Best wishes

Unison National Officer



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