Anecdote from a brief experience trying to introduce physical commodity trading to an investment bank.

Goober to bank lawyer:

“This is a completely conventional document format that has governed millions of tonnes of mineral exports to north Asia for thirty years”.

Bank Lawyer to Goober:

“This is an operational document ! Totally unacceptable – all banks want to know from trading counterparties is how they will rip their money back out of them in a default.”

Hopefully the investment banks will all retreat back to recycling other people’s money as the credit bubble implodes.

I am inclined to agree on this. When I worked for Geopeko we became a drilling contracting company in our own right instead of just the drilling division of Peko Wallsend. Contracts are normally in the form of a letter of agreement, stating prices, the terms, hole sizes etc and are rarely more than five pages long.

When the agreement for the first contract was submitted the legal department returned it as a thirty page diatribe of legalese bullshit that the client wanted nothing to do with. The whole thing had to be thrown out and the original reinstated, but that took some hard talking with the directors to do it.

We almost lost what to most contractors would be seen as a ‘company making’ contract over it.

Pretty much resonates with my own experience of Citibank’s Australian card division – who reduced my wife to tears before I tore up their plastic.

If Citibank goes belly up in the GFC due to their mis-management and gross incompetence – I for one will cheer the demise of another shambolic bureaucracy.

“I have always maintained that nobody should be allowed into the public service until they have done a few years in the private sector to give them the feel for how things are done in the real world on a commercial basis. This proves me wrong.”

I don’t think it’s wrong – it just needs to be the non-banking private sector. Basically, any company that gets big enough to have a large legal department, becomes inefficient and bureaucratic.

Jim I think it is a mistake to assume that the private sector is better at organising things. The problem in my book is not that the Australian public sector isn’t well run, it is that it is busy running things that people simply wouldn’t pay for if given an option. The beauty of private bureacracies is that they can go into liquidation. Although some American banks seem to have found an escape hatch.

US bank call centers require an IQ of less then 30, which means only a functional brain stem. This person wouldn’t have been able to cogitate what death means.

Then it’s also Citibank suggesting an even lower IQ.

I kid you not, I read somewhere that the Treasury Sec. has been getting hugely impatient with Citi as they are far too bureaucratic! LOL.

I found it in trader’s blog in the comments section and will try to link it.