A call to account: In search of a Dickens or Trollope for our times

I have never met Sir Fred Goodwin, but I feel that I know him pretty well these days. Thanks to his job – which ends next month – at the head of the Royal Bank of Scotland group, the high-flying but fast-falling banker wielded control over much of my savings. Risk-averse innocents (such as me) used to think of his institution as the Edinburgh epitome of sobriety and stability. "Suckers" is the technical term, I believe. By Friday 10 October, it became clear even to the most blinkered depositor that Fred the Shred's buccaneering years at the helm had played a large part in bringing my bank to the brink of the biggest corporate failure in European history. It was like discovering that your Presbyterian maiden aunt had been running a chain of casinos.

When a stranger drives you unasked to the edge of an abyss, it's natural to seek to understand a bit about the chap. Now, I think I do. Leaving to one side the question of whether the US regulatory authorities investigating the sub-prime mortgage debacle may in due course have plans for the Paisley dynamo that involve something worse than dirty looks at the golf club, one thing struck me above all. Whether or not Sir Fred ends up in court, he should indisputably end up in print. What a novel his rise and fall, and the backdrop to his truncated career, would make. But who, among living British writers, could settle this account? Although the subject hardly has much in common with his usual beat, perhaps Irvine Welsh might have a crack at it.

Now, above all, is the time for alert and ambitious novelists to make a killing in the City; to clean up at Canary Wharf. Stripped of its mysteries, the story-arc of the past decade – of expansion and explosion – stands revealed along straightforward, almost classical lines. Nemesis has duly caught up with hubris. Pride came before the fall. And, as the binge ends in crash, the hangover will last for years – for everyone. In an interconnected world of debts and savings and mortgages and pensions that make millions of civilians share the fate of those disgraced masters of the universe, the art of fiction has a special power to join the dots, complete the picture, and do justice to the raw emotion that seethes and churns behind economic life. The challenge for novelists lies not just in showing how rogue or reckless tycoons and wheeler-dealers first boomed and then bust, but why their acts caught the spirit of an age – and sucked the rest of us up into their delirious slipstream.

With exquisite timing, Margaret Atwood has just published Payback, a series of radio talks (Canada's equivalent to the Reith Lectures) which she chose to give on "debt and the shadow side of wealth". Major writers can sometimes display a prescience that almost beggars belief. So it is with Atwood's analysis of the many ways that debts produce plots: of obligation, guilt, retribution or escape. "Any debt involves a plot line," she argues: "How you got into debt, what you did, said and thought," and then "how you got out of debt" or else "got further and further into it until you became overwhelmed."

Payback must be the first time that the toxic residue of the sub-prime mess (when "large financial institutions... put this snake-oil debt into cardboard boxes with impressive labels on them") has coincided with The Merchant of Venice, A Christmas Carol and the Eumenides of Aeschylus in a critical study of money and morality. Atwood demonstrates that the love or loss of cash carries storms of passion in its wake. For her, debt as a cultural force – and you might say the same for finance as a whole – "magnifies both voracious human desire and ferocious human fear". After heady years of the first, we have now witnessed a month of the second – with a vengeance.

Let's hope that Atwood converts her insights into art and gives us a masterwork of fiscal fiction. We could certainly do with a few more. In Britain especially, the sudden promotion of "financial services" from upper-crust character part in our national drama to above-the-title headline star has gone more or less unnoticed by most of our leading novelists. They don't do high finance and its human fall-out – or else, they do it merely as glib caricature. David Kynaston, the historian who wrote an acclaimed four-volume history of the City of London from 1815 to 2000, comments that "my beef as a general reader is a sense of disappointment that much modern British fiction has not done what it might have done". When future historians look for creative interpretations of the Great Crash of 2008, he adds, "I think it will be seen as a shortfall in the evidence."

From another, rougher kind of entrepreneurial culture, Aravind Adiga last week won the Man Booker Prize for The White Tiger: a fiction that tells the story of India's fragile economic miracle through the ascent of a charismatic go-getter out of the "darkness" of rural poverty and prejudice. Balram Halwai, the once-servile chauffeur who grows up (or down) into a swanky Bangalore Macbeth, will endure as an icon of his tradition-smashing times.

But where are his British counterparts: the wizards of the hedge fund (the Man Group's own business, after all), investment bank or private equity outfit whose sorcery on the balance sheets delivers magic or mayhem into many remote lives? Precious few, and far between. Earlier this year, former City dealer Nicola Monaghan published Starfishing: a scorching, high-octane novel of life a few years ago in the sweaty, sexist jungle of the London futures exchange. Less accomplished as fiction, but eagerly received by many of its subjects, Geraint Anderson mingled memoir and imagination in his raucous testimony of "beer and loathing" in the Square Mile, City Boy.

Far from the bonuses and the Bollinger, David Gaffney's Cumbria-set novel Never Never depicts the street-level scams and stunts that let a crooked debt-counsellor and his luckless clients take advantage of our now-burst credit bubble. Significantly, such books enlist the experience of (retired) low-level veterans to give the poor bloody infantry's view of finance red in tooth and claw. Any kind of wider panorama, seen from the glass tower's top-floor boardroom, remains vanishingly rare. Maybe we will simply have to wait.

Which British authors might find themselves best placed to alchemise crunch into creativity? Writer and critic DJ Taylor's forthcoming novel, Ask Alice, will revisit the City during the early-1930s slump. He points to the track record of Justin Cartwright, and the insider's insight behind his take on London corporate life – especially in his 1995 novel In Every Face I Meet. "That really does carry the tang of authenticity: he knows whereof he speaks." Taylor also recommends Ferdinand Mount's The Liquidator and Piers Paul Read's A Season in the West as persuasive recent fictions of life at the top of the money mountain, but warns that: "Given the fact that most financiers don't know how derivatives work, it's going to be difficult for novelists."

James Buchan, who dissected the emotional fallout from the 1987 crash in his novel High Latitudes and, as a journalist, writes incisive articles on the hidden stories of finance, looks a likely candidate. With his well-concealed business background, Welsh himself is not such an outrageous pick. Kynaston has high hopes of John Lanchester, the novelist – and banker's son – whose close-focus essays on the meaning of big money in the London Review of Books testify to his immersion in these deep waters.

Improbable though it may sound, I would love to see Sarah Waters invade this domain. With her Dickensian flair for clandestine connections and hidden affinities, her skill in dramatising the exchange between respectable public life and its secret shadow side, she commands all the necessary strokes. The downbeat 1990s aftermath of Thatcher's roller-coaster did yield some profitable fictions of financial temptation and transgression. Jonathan Coe's carnivalesque What a Carve Up!, Buchan's finely wrought High Latitudes and Taylor's elegiac Trespass were prominent among them.

During the Thatcher years themselves, however, British novelists typically fixed their dazzled eyes on the decor rather than the architecture of a newly roaring turbo-capitalism. Martin Amis's Money led (or misled) the pack. Across the Atlantic, meanwhile, Tom Wolfe seized hold of the mercenary but fearful spirit of the time with his blockbuster of a Wall Street merchant prince at bay in a feral Manhattan, The Bonfire of the Vanities, in 1987.

Famously, Wolfe put in the hours –and months –of slogging research. That makes the ebullient New Journalist turned exuberant epic novelist a rarity indeed. When it comes to working and social life, most gifted novelists write of what they know – either at first hand, or from trusted sources. So, from Kingsley Amis to Zadie Smith, post-war British fiction stitches the universities up a treat. From Michael Frayn to the younger Amis, it does the media to a turn. From Alan Sillitoe to Pat Barker, it boasts an intermittently honourable record when it comes to the working-class grind of factory and mine, warehouse and shop. And, from PD James to Ian Rankin, its mighty criminal network reliably informs on the inside story of police and justice with a professional insistence on the accuracy and credibility of the report.

With rare exceptions, account books remain closed books to novelists. During his study of its past, Kynaston "came to the conclusion that outsiders looking at the City have found it, broadly speaking, a) boring, and b) incomprehensible. That's quite a double hurdle to get over." In addition, until the global weather-systems unleashed on the Square Mile after the "Big Bang" of the 1980s, "the City was traditionally very distant from the mainstream of British life. It was absolutely its own world."

Yet in previous periods, curious and visionary novelists worked hard to crack its code. As naked entrepreneurship took off in 19th-century Europe, writers thrilled to the almost demonic energies they saw in its champions. Balzac's sweeping novels of change in post-revolutionary France crawl V C with chancers with an eye on the deal. As his Père Goriot warns: "The secret of great fortunes without apparent cause is a crime forgotten – because it was done well." That could stand as a motto to Adiga's The White Tiger.

Hyped-up railway stocks were the dotcom speculations – or sub-prime debt packages – of the Victorian age. And the suicide of one railway swindler, the financier and politician John Sadleir, on Hampstead Heath in 1856 lies behind the mystique of two of the most memorable crooked bankers in 19th-century fiction: Mr Merdle in Charles Dickens's Little Dorrit, and Augustus Melmotte in Anthony Trollope's The Way We Live Now. Neither novelist delves very deeply into the innards of fraud, but both capture the echoing repercussions of a City downfall as dark deeds in a counting-house wreck innocent and distant lives. "Numbers of men in every profession and trade were blighted by his insolvency," Dickens laments after Merdle's death and exposure; "legions of women and children would have their whole future desolated by this mighty scoundrel." When Little Dorrit reaches TV screens this weekend in Andrew Davies's new adaptation for BBC1, we might – costumes aside – mistake it for the news.

The speculative highs and lows of the last fin de siècle also left a literary mark. David Kynaston has "a soft spot" for George Gissing's 1897 novel of middle-class misadventures in the stock-market maelstrom, The Whirlpool. A decade later came EM Forster's great study of the dialectic between bourgeois and bohemian England: Howards End, where the something-in-the-City Wilcoxes come to depend on the refined Schlegels – and vice versa. John Galsworthy's Forsyte Saga sequence, which began in 1906 with The Man of Property, exposes the fissures that opened up in elite English life when City wealth sought to brush the Square Mile's dust from its frock-coat and join the landed gentry. For Kynaston, the social-realist novel of the City and its people lingers until JB Priestley's Angel Pavement in 1930, with its shabby bit-part players of Clerkenwell, doomed to life on the fringes of serious money. "The trail goes fairly cold after that."

Of course, contemporary social realism is not the only road to understanding; the house of fiction has many mansions. But look, say, at the yawning chasm between the fertility of the campus novel since the 1950s and the debility of the City novel, and you see how talented authors with a flair for institutional scrutiny have stuck to the comfort zones of their upbringing, contacts and milieux. The academy, the media, the law, the arts, the Civil Service: all home turf for the mainstream literati. Even at a time when dozens of novelists have friends and acquaintances who chose to chase the salaries offered by the banks, funds and consultancies, the daily routines of such characters tend to figure as a perfunctory litany of clichés.

One prime current example comes from a novel that (although not strictly British) ran hard in the Booker race and takes place partly in the booming City. Joseph O'Neill's Netherland lavishes tender loving care on its offbeat motif of cricket in New York. This must surely be the first novel given a rave review in The New York Times that expertly alludes to the commentating style of John Arlott. However, when it comes to the Dutch narrator's Wall Street and City career as an equities analyst for a merchant bank, evasion and euphemism rules. It's weird: a hugely perceptive novel that refuses to stint on the – for Americans – outlandish arcana of turning wickets and extra-cover drives seems embarrassed to visit the office for a spell. As banker Hans himself says, his "exotic cricketing circle... made no intersection with the circumstances of my everyday life".

Do novelists really find this material dull? Then the fault lies within. As Atwood sees, money in the modern world creates open-ended networks of exchange: debits, credits, hopes and fears. It binds the high and the low, the near and the far. It forges coherent patterns out of disparate events, creates reverberating chains of cause and effect, and – as the past few weeks of mind-stretching write-down revelations have proved – often thrives on far-fetched fictions of its own. For a writer, what's not to love – and to use?

In his 2003 novel Cosmopolis, Don DeLillo lifts the thoughts and perceptions of his young speculator-hero into an almost abstract realm – until the brutal reality of New York streets intrudes. The book deterred or disturbed many critics, but DeLillo grasped that the almost metaphysical nature of the invisible trillions that slosh around our screens – and heads – right now might require an equally spaced-out style.

Alternatively, the old tycoon's trajectory – of soaring ascent, sudden collapse and final rehabilitation – may still exert its pull. More at ease with the self-made Midas, American novelists have done better with this icon of the capitalist age. Long before Wolfe sent his real-estate magnate Charlie Croker (from A Man In Full) riding for a fall down the runways and fairways of the rich new South, his forebears had relished fictional epics of fortunes won and lost. In 1912, Theodore Dreiser introduced his stock-market virtuoso turned streetcar king turned jailbird, Frank Cowperwood, hero of The Financier and two later novels. Or rather, Dreiser adapted him from a living, breathing original named Charles Yerkes. When the real-life Yerkes saw his Chicago transit empire founder in scandal and recrimination, he started over in London. His coups on these shores included the electrified underground railways that became the Bakerloo, Piccadilly, District and Northern lines. Now, surely that's a story to send panic-stricken commuters thinking – if not quite laughing – all the way to the Bank.

'Little Dorrit' begins on Sunday at 8pm on BBC1

How to make a killing: five authors who skewered the masters of the universe

Charles Dickens

Son of a chronic debtor, Dickens often draws on the dread of ruin. Generous merchant princes do figure in his fiction, but devious and sinister financiers leave a stronger taste. None casts a deeper chill than Mr Merdle, the lionised banker of Little Dorrit, whose fraud brings innocent victims down.

Anthony Trollope

Trollope's Palliser novels expose the channels connecting high finance, parliament and aristocracy, but his definitive City novel is The Way We Live Now, with its anti-hero Augustus Melmotte: the man from nowhere who builds a fortune and a social network on the basis of an enormous American scam.

Theodore Dreiser

Dreiser's chronicles of love, wealth and disgrace became monuments of American dreams – and nightmares. His trilogy that began with The Financier in 1912 captures the reckless spirit, borrowing from the life of Charles Yerkes, a Chicago stock-market wizard who later built much of the London Tube.

Justin Cartwright

Cartwright's novels of cash-rich 1980s London blend an insider's grasp with an observer's satirical detachment. Look At It This Way merges City themes into a tragi-comic panorama, while In Every Face I Meet stages a Dickensian collision between moneyed misery and the vitality of the unruly poor.

Tom Wolfe

In 1987, Wolfe unleashed his weapon of mass derision on yuppie New York: The Bonfire of the Vanities. With the danger that can grip a "master of the universe", he aimed to show how the fates of rich and poor in the city are entwined. In A Man In Full, he went to Georgia for a rich portrait of a property tycoon.