I was a banker. To most people these days that means you were a stuff and somewhat money-grubbing sort of traditional office geek. In ancient days the profession of moneylender was a far less savory profession. They were the shylocks. “Shylock” is slang for a loan shark: someone who lends money at extortionate interest and often enforces repayment with threats or violence. As a verb, “to shylock” means to lend at usurious rates. The term comes from Shylock, the Jewish moneylender in Shakespeare’s The Merchant of Venice who demands a “pound of flesh” as collateral. Because the character draws on antisemitic stereotypes, the word is widely regarded as an antisemitic slur. It still turns up in older legal and law-enforcement usage (New York courts long used “shylocking” for criminal usury), but “loan shark” or “usurer” is the safer choice today, especially in professional writing or testimony.
Banking’s darker history comes in recurring patterns rather than isolated scandals. In Medieval times it was all about usury and scapegoats. The Church banned charging interest among Christians, which pushed moneylending onto Jews, who were then taxed, resented, expelled, and massacred when kings or debtors found it convenient (which they did repeatedly and to their own benefit). England expelled its Jews in 1290 after squeezing them dry. Christian bankers evaded the ban with legal fictions. The Medici disguised interest inside currency-exchange contracts (bills of exchange), not unlike the Muslims do today through Sharia Banking practices. Lending to sovereigns was dangerous. Philip IV of France crushed the Knights Templar in 1307 partly to escape his debts to them, and Edward III’s defaults in the 1340s helped ruin Florence’s Bardi and Peruzzi banks.
Early capital markets financed the slave trade and plantation economies. In 2005, JPMorgan Chase disclosed that its Louisiana predecessor banks had accepted enslaved people as loan collateral, and Lehman Brothers began as Alabama cotton brokers. Chartered trading companies like the Dutch and British East India Companies blurred the line between finance, war, and conquest, and HSBC was founded in Hong Kong in 1865 to serve a China trade shaped by opium.
Recurring 19th-century panics were fueled by speculation, watered stock, and railroad fraud. The 1912 Pujo Committee exposed a “money trust” of interlocking directorates, which led to the Federal Reserve. The 1929 crash and the Pecora hearings revealed insider pools and self-dealing, which produced Glass-Steagall and the SEC. Banking had more than its share of progressive scandals to tarnish its image. Then in the 20th century, Swiss banks held assets looted by the Nazis and dormant accounts of Holocaust victims, leading to a $1.25 billion settlement in 1998 (led by none other than our late great, Paul Volcker). Redlining, starting with the government’s 1930s HOLC maps, systematically denied credit to Black neighborhoods for decades. BCCI, an infamous Middle Eastern bank, shut down in 1991, laundered money for dictators, drug cartels, and terrorists. The S&L crisis cost taxpayers well over $100 billion. Bankers just kept doing more and more unsavory things to make themselves look bad and earn their Shylock reputations.
In the more modern era, in 2008, predatory subprime lending, securitized junk, and “too big to fail” bailouts (I was caught up in that, but less as a lender and more as a buyer of that junk). In 2012, HSBC paid $1.9 billion over laundering for Mexican cartels and sanctions violations. Then there was the huge LIBOR rigging, FX rigging, and Wells Fargo fake-accounts scandals that followed. The constant is regulatory arbitrage: every rule spawns a workaround, and every crisis spawns a new rule. A related warning is that antisemitic conspiracy myths about “Jewish bankers,” like the Rothschild legends, are themselves part of banking’s unsavory history, grown from the same medieval scapegoating.
I’ve spent the last 50 years carrying this banker baggage. As a TV and movie buff, it started with Snidely Whiplash putting the fair Nell on the railroad tracks since she “couldn’t pay the rent”. I wanted to be Dudley Do-Right, not Snidely in the black hat. Classics like It’s a Wonderful Life (1946) had Mr. Potter, the miserly banker who tries to crush George Bailey’s building and loan and thereby becoming the definitive screen villain-banker. In The Grapes of Wrath (1940) “The bank” is a faceless monster evicting Dust Bowl farmers. In Mary Poppins (1964) the doddering Dawes Sr. was an unhappy banker and a bank run, triggered by a child’s tuppence was the crisis. In more modern times The Bonfire of the Vanities and Wall Street started to get into my era with the self-styled bond-trading and insider-trading “Master of the Universe” personas. Boiler Room (2000) and The Wolf of Wall Street (2013) portrayed the pump-and-dump brokerages, and my least favorite movie (because it hit WAY too close to home for me) was The Big Short (2015). Only Margin Call (2011) was a truly accurate depiction of the real world on banking on Wall Street, and it was more sympathetic than not about the life of bankers, even though the bosses at the top were still cold and somewhat heartless.
So now I have a personal crisis of sorts. In my last true “job”, I was the CEO of a small company that struggled as a scientific start-up to get funding and make ends meet. As is typical, in the late stages there was not enough money for everyone, so as CEO, I took a deferral in lieu of a secured interest in the assets of the company should it go into liquidation. I also agreed that when it was time for me to leave, I would forego my contracted severance (money they had, but which they needed elsewhere) and lump that in for future settlement along with my presumably worthless stock. When the company did eventually liquidate, the main funder ( a rich guy who lived in Nevada) kept the proceeds rather than distribute them to the folks like me that had first claims on it. We tussled over this last year and all agreed to take promissory notes due in one year in order to give the guy the time to gather his resources. He is in episodic email touch with me (I sort of speak for the group of ex-employees) and is pleading poverty (as one does when one does not want to pay). His whole argument a year ago was that we should take the settlement for the promissory notes since those could be easily filed for judgement against him in a Nevada court. Well, judgement day is here on November 1 (this Sunday)…the day after Halloween. I don’t turn into a pumpkin, but I do turn into a banker. A banker who intends to be a collection agent.
A dunning notice is a reminder sent to someone who’s behind on a payment, asking them to settle the overdue balance. The term comes from the old verb “to dun,” meaning to pester a debtor for payment. They usually escalate in stages: a polite “friendly reminder” first, then firmer letters that cite late fees or interest, and finally a warning of consequences like filing a claim in the courts. Each state has its own process and in Nevada, the usual path starts with a demand note. I have had Claude write one up for me then suit the occasion and it uses all the legalese needed to make someone think I’m serious. If that doesn’t work, I get a collections attorney in Las Vegas and file a claim. If it gets contested, then I’m in for a court battle, but he has to pay my legal fees if he loses. He would only go that route if he does have money, but wants to stiff me. If he has no money he will not contest and let the judgement stand. Who knows where it goes from there, but I trust the legal system enough (if I stay on top of it) to get me something out of this. There is no way this guy is penniless. He is the Snidely Whiplash in this scenario, not me (or at least I have convinced myself of that). Since he has not responded to my “nice” note this week, I’m guessing that he is running for cover, betting that I’ll just let it drop. I won’t. I want to play banker and I want, for once, to get back money I have loaned to a deadbeat (I have written off more bad personal debts than I care to remember). So, on Monday morning, I’m sending off my first dunning notice.