19The Production and Reproduction of Trust Violations

An exploration of theory and practice in universal banks prior to the global financial crisis

Robert F. Hurley


Modern economic activity involves the exchange of products or services and money. Central to economic exchange is the movement of money through banks and the larger financial system. As we saw during the global financial crisis (GFC) in 2008, money only moves when there is trust; that is, the willingness of parties to rely on one another to fulfill obligations. As the GFC began to unfold, the interbank interest rate spread versus risk free treasuries increased fivefold in the United States reflecting a lack of confidence and a need for more of a risk premium to part ...

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