The aftershocks of the Global Financial Crisis that begun in 2007 are still being felt today, as economies around the globe battle with the effects of the recession that followed it. Many causes of the crisis have been suggested but the behaviour of those in the banking industry – more than any other area – is seen to be a primary cause, and the mere mention of the word ‘banker’ conjures up an image of a greedy, reckless individual who profited massively (and still profits) from the misery of others.

As someone who worked in the banking industry before, during and after the crisis, I thought I’d lay bare some of the underlying issues I feel contributed to it. This is not to absolve the industry of responsibility in any way, but to show that governments, regulators, the accounting profession, rating agencies and others all played their part. Without changes in each and all of these, the chance of another financial crisis in the not too distant future remains high.

Over the months ahead, I’ll approach these issues through the form of questions, for example:

  • Do you think it’s sensible for banks (or any other organization, for that matter) to lend money to people if they have good cause to believe that it won’t be paid back?
  • Do you think it’s sensible for banks to borrow vast amounts of money themselves via the financial markets?
  • How much cash do you think banks keep in reserve?
  • What happens when a bank can’t borrow money?
  • What would happen if the financial markets got so worried about risk that lending practically ground to a halt?
  • What happens when the banking industry in a country is huge compared to the economy of the country itself?

Clearly there are plenty of books out there that talk more about the crisis and provide colour on all of these questions, and many more. For a brief chronology of the events leading up to the crisis, there’s also a presentation I gave towards the end of 2012 to senior figures in the Church in Wales as part of a symposium on faith and money. The presentation is a little bare without the talk to accompany it, but there’s some useful info should you want it.