In his spirited defence of liberal capital markets and free trade, Why Globalization Works
, the associate editor and chief economics commentator of the Financial Time
s, Martin Wolf, addresses the question of effective banking regulation. He writes:
"The management of any systematically important bank that has to be rescued by the state should be disbarred, as a matter of course, from further work in the financial industry. Remember the fundamental point. Big banks have consistently operated in the knowledge that their profits are private and losses, if large enough, public. In other words, the institutions they run are underpinned by the state. Managers are, in an important sense, public servants. If they abuse that trust, they should be treated accordingly." Why Globalization Works
(Yale, 2005, paperback edition, page 298)
So, what should happen to the managers of those banks now being rescued by the state in the US and the UK? In the view of the associate editor of the Financial Times
they should be barred from further work in finance, as far as I can tell.