At a town hall meeting in New York on November 17, embattled Citi chief executive Vikram Pandit felt compelled to spell out the basics of banking to his assembled troops.
He asked (what we hope was) a rhetorical question: "What does a bank do?" The answer was – raising funds through deposits and wholesale markets and channelling those into loans...
Of course, for a post-late 1990s’ intake, the rudiments of banking might well not have been taught at all in those early training days. Surprisingly, no mention was made of the three Cs of lending – credit, capacity and collateral. But Citi’s employees did find out that raising deposits globally and putting too many to work in US residential real estate was not a good idea.
Euromoney welcomes this back to basics approach. And perhaps to avoid future crises, it is best to start teaching people about the credit crunch at an early age.
Perhaps, indeed, it is time to update some classic nursery rhymes. Here’s one that springs to mind. We’d welcome any other submissions.
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This little piggy went to market
This little piggy bought homes
This little piggy invested in toxic debt
This little piggy suffered a run
And all these little piggies cried:
"SHIIIIT!"
All the way to the US Treasury |