There’s No Room for Innovation Now

We started BankInnovation.net to monitor the renewal of innovation in banking in the wake of the credit crisis. Our expectation was — and is — that the credit crisis would create a new strategic thinking on what is banking, risk, and the path to safe-and-sound growth.

The events of the last four days have totally derailed any innovation in banking.

This is all about survival. The panic on Wall Street is just remarkable. AIG’s tagline still is “The Strength to Be There.” Uh, right. Not even the goldenest of golden Wall Street firms, Goldman Sachs, would dare slap such a tagline on its company now. That is, unless the tagline was amended to “The Strength to Be There — Until 11:15 a.m.” Yesterday, senior Goldman executives were going from office to office wondering whether even the venerable firm was done-for. At Goldman Sachs, no less.

The Federal Reserve is just handing out Band-Aids and blankets in the form of a $180 billion swap line. The swap line will work — until 11:15, or soon thereafter. The corrosiveness of the hundreds of billions of dollars of depreciated assets will continue to haunt the global economy. More panic is yet to come.