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10 22 2015 | by Victor Xing | Economics

Are bankers unfairly vilified by the media?

This question comes up often during conversations, as media often attribute bankers as the catalyst for the 2008 financial crisis

In my view, many bankers were merely operating under a (monetary and regulatory) policy framework set in motion even before they began their banking careers.

For example, the housing bubble was fueled by accommodative central bank policy following the dot-com bubble burst and 9-11 attack.  Borrowing cost was low, and banks were all making risky loans as credit was plentiful.  If a bank doesn’t lend to borrowers with shaky credit report, another bank would do so (and the responsible loan officer in the first bank will likely face negative repercussions).

Consumers also share some of the blame – prudent financial planning was replaced by greed-fueled frenzy.  Many borrowers ignored their intuition that low income and high mortgage loans can be a risky combination.  Instead, they believed it was everyone’s right to own a house.  Many responsible renters and homeowners were labeled “dumb” as serial house flippers prospered during the boom.

Yet, the media has consistently portrayed irresponsible borrowers as hapless victims and dumped all guilt onto bankers’ shoulders.

Next article10 20 2015 | by Victor Xing | Capital Markets

Why do yield curves flatten during period of deflation?