Saturday, December 18, 2010

Who is in charge of banking?

Listening to a comment on the radio this morning set me thinking.

The commentator said “who is in charge of banking, we all thought that the bankers and regulators were in control, but it seems that there was no regulation or anyone in charge”

My thinking lead me to recall a scene I had watched from the home-office window yesterday. A coating of snow lay upon everything, and the birds were struggling to find some food.

A neighbour of ours had planted a sapling in their front garden a few years ago. A slow growing variety, it has taken those years to get to the small size it is now. It is a type that has red berries at this time and this year it is laden with red.

My eye was caught by a small flock of about 50 starling sized birds, wheeling and swooping in the sky.

As I watched they swooped in a gradually closing circle around the tree until the leader suddenly dropped from the swoop and landed on the tree, the immediate followers landed while the laggards swooped in another circuit as it seemed they had not expected a landing on that particular pass.

The leading birds grabbed beakfuls of berries and then, as the tail end of the flock landed, the leader and first tranche took flight, very quickly followed by all the rest.

This activity was repeated many times as I watched, and as is my way, I was trying to understand the process and the thinking behind it.

It seemed to me the leading part of the flock were getting most berries. They spent most time on the tree. The whole flock was being lead, as is usual, by a single bird, the rest following in the classic Starling formation.

What did I observe?:

  • When the first bird landed the formation split into two and the trailing birds did one more circuit lead by an alternate bird.
  • The leading bird was gorging for the longest time
  • The early following birds got the second longest time.
  • The trailing birds had less than a third of the time, firstly because they missed the instruction or whatever message to land, and thus they had to complete a extra circuit; secondly because as the lead bird left shortly after they landed and they did not stay behind their gorging was much shorter.
Could this be the structure of control in the banking business?

There appears to be a hierarchical structure in both, but the command flow seems much more fluid.

  • What are the benefits to this structure?
  • Would it be better to all land together?
  • Would the tree have collapsed under the weight?
  • Should the second tranche have stayed rather than taking flight?
  • Who was acting as lookout?

I know there have been studies of bird flight behaviour and will look there for some insights, at the moment there are more questions than answers, maybe you can help point toward some answers?