# AIB,Moral Hazard & Corporate Greed



## Riddler (19 Dec 2005)

AIB and the Moral Hazard of Corporate Greed

Are we seeing the further unmasking of what amounts to rampant corporate greed where standards of corporate social responsibility have plummeted to a new low ?

Banks are a protected sector in the economy. They are protected because of their importance. Yet this very protection gives rise to risks of moral hazard behaviours. 

Are we not seeing in the AIB case this at work ? Is the hazard in play a culture of greed that has intimidated stakeholders over the past 30 years of sagas beginning with the ICC collapse, DIRT, Rusnak, Feldor, Foreign Exchange and lately manifesting itself in the Prime Time revelations of systemic fees and interest rip off practices...which according to AIB are forgiveable because they were "technical issues" and anyway happened in the past. 

At what stage does the Government step in and what responsibilities has it got to protect it’s citizens (bank customers) from such behaviour ? IFSRA has been largely silent …or has it within a short time become captive of the very forces it is trying to manage? Could it be that the cultural bias of prudential supervision is winning out ? Can the IFSRA Consumer Panel ensure a consumer counterbalance ?

Being too big to fail begets a higher potential for corporate misbehaviour. Perhaps it is a fact of life that until the share price reflects a measure of corporate responsibility then such behaviour will continue. The one thing that could effect investor sentiment is the potential for loss of business as customers vote with their feet and leave in disgust at the way in which they are being treated. What chance of this if they believe that "they are all the same" ? 

On a final thought ..what of the IAIM ..do investment fund managers have a view on stakeholder relationships and the potential damage to a brand and reputational capital at this time ?


Riddler


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