Who were the main beneficiaries of the rise of finance? Some have attracted considerable publicity and scrutiny, while others have largely escaped it.

Intermediaries: the anonymous rich

Around the world every year an astronomical number of transactions take place in the financial sector. While the majority may be automated, the more customised ones provide rich pickings for intermediaries in financial and legal institutions who provide the services necessary for conducting them for fees and commission. The intermediaries are an essential part of the financial ecology and make up the majority of the working rich in the financial sector. Flourishing from being near a big till where they can engage in value-skimming and assisting active rentiership, they are a key group of beneficiaries of financialisation. The more trading – or churning – of assets they can facilitate, the greater their income; not surprisingly, they encourage transactions rather than wait for custom. Managers of funds on behalf of clients such as pension funds can take advantage of their superior market knowledge to corner a significant share of the gains for themselves and to charge high fees. Trading of customised financial products such as credit derivatives ‘over the counter’ – that is, one-to-one between buyer and seller rather than in a competitive market trading more transparent standardised products with many buyers and sellers – heightens the information asymmetry in favour of sellers and the opportunity for them to extract rents. Carrying out mergers and acquisitions is an especially lucrative line of business, with fees averaging 1.5% of deal value. Vodafone’s takeover of Mannesman yielded $640 million in fees for intermediaries. These fee revenues are typically concentrated at the top. In Goldman Sachs, around 8% of net revenue was claimed by partners who made up about 1% of the firm’s 25,000 workforce, receiving bonuses of nearly $7 million in 2005. Then there is the support force of public relations people, consultants, marketing experts, lawyers, creative accountants and tax avoidance experts, all of whom are in a strong position to reap large rewards.

In the financial sector in Britain, the number of intermediaries has been estimated at 15,000. These largely anonymous members of the so-called working rich far outnumber chief executive officers (CEOs) and senior executive directors (c.600), let alone footballers and celebrities.