It remains nearly impossible for investors to understand what’s going on inside the big banks—and what risks they’re taking on:
“When we asked Dane Holmes, the head of investor relations at Goldman Sachs, why so few people trust big banks, he told us, ‘People don’t understand the banks,’ because ‘there is a lack of transparency.’ (Holmes later clarified that he was talking about average people, not the sophisticated investors with whom he interacts on an almost hourly basis.) He is certainly right that few students or plumbers or grandparents truly understand what big banks do anymore. Ordinary people have lost faith in financial institutions. That is a big enough problem on its own.
“But an even bigger problem has developed—one that more fundamentally threatens the safety of the financial system—and it more squarely involves the sort of big investors with whom Holmes spends much of his time. More and more, the people in the know don’t trust big banks either.”
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