As someone who works in the City, even I sometimes think the Occupy Wall St brigade have
a point. When you consider Barclays’ behaviour today, it’s a
surprise that the protests didn’t come earlier. The bank has announced an $11.5 billion loan to junk-rated Kinder Morgan Inc to fund an oil pipeline transaction.
The banks have money to lend; they just choose to gamble it. The reason? Simple. Risky loans and takeover deals can earn enormous fees for investment banking arms. Those fees are paid in advance and bonuses for senior management are drawn from those sums. The loans may also get placed on the commercial bank book — and future losses don’t impact on bonuses, which have been already paid out. The profit from lending to small businesses is accrued over several years, which is no match for a fast buck now.
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