The word banksters, which is a play on the ‘bankers’ and ‘gangsters’ – a portmanteau of the two words – has several meanings, from greedy, reckless bankers to outright corrupt and dishonest individuals performing illegal acts in the financial sector.
They are members of the banking industry who make money by unethical, dishonest or fraudulent means.
The term emerged in the 1930s when Sicilian-born lawyer Ferdinand Pecora, chief counsel to the US Senate Committee on Banking, which had been set up to investigate the origins of the 1929 Wall Street Crash. He exposed many reckless and illegal practices which had been condemned in 1928 by Harvard’s Prof. William. Z. Ripley.
Pecora used the word banksters, which contrasted with Ripley’s colorful description of their activities, which he said included “prestidigitation, double-shuffling, honey-fugling, hornswoggling and skullduggery.”
From Fed backers to reckless and dishonest bankers
Right-wing American politicians in the 20th century often used the term banksters as a slur against supporters of the US Federal Reserve System. Members of the Austrian School of Economics saw the Fed as something between a scam and a conspiracy, and described those who supported it as both gangsters and bankers.
The term, which is more commonly used in the plural, today generally means bankers who pursue aggressive risk reward strategies with no professional regard to the potentially disastrous effects their strategies may have on shareholders, investors and other stakeholders.
The term bankster today could be used to describe Barnard Madoff, whose deceitful Ponzi scheme lost $50 billion of other people’s money.
According to Oxford Dictionaries, a bankster is:
“A member of the banking industry seen as profiteering or dishonest.”
After the 2007/2008 global financial crisis hit, the term became popular again in the media. It was used to describe bankers who exploited vulnerable people, such as those involved in the US subprime loan scandal.
An article in the Economist in 2012 titled “Banksters” talked about Britain’s rate-fixing scandal, suggesting that it might spread and what could be done about it.