Skip to footer

As bank scandals add up, a need for a culture of integrity in banks

The HSBC scandal comes soon after reckless or deceitful behavior at Barclays and JPMorgan. The pattern lies in a bank culture that doesn't emphasize character enough. A survey of the industry shows why.

|
Lefteris Pitarakis/AP Photo
A view of London's City financial district.
  • By the Monitor's Editorial Board

Institutions and industries from Congress to the news media have fallen sharply in public favor. Some are reforming fast. Others remain stuck in old habits.

One industry, banking, has seen scandal after scandal exposed in the postrecession era – HSBC, Barclays, JPMorgan, to name only the most recent ones.

Since 2008, confidence in banks has dropped by half. Only a fifth of Americans now trust them. And that’s two years after Washington passed the toughest regulations on the financial industry since the Depression.

More regulations can do only so much for reform, as can the public shaming of bank executives in hearings on Capitol Hill. The most lasting reform lies in the financial industry itself making sure that it operates with a culture of integrity.

That’s not easy unless top executives know how much their workers actually put such qualities as honesty and service to clients above personal gain. Hiring practices often look first for performance, knowledge, and loyalty. Well-written codes of ethical conduct are often ignored, as is reckless risk-taking.

Surprisingly, 94 percent of American and British senior executives in the industry say they are willing to report wrongdoing at work, according to a survey released last week by the whistle-blower law firm Labaton Sucharow. And 86 percent say they put their clients first.

That’s a good base for the industry to build on – because the rest of the survey isn’t very encouraging.

A quarter of the 500 professionals surveyed said they may need to engage in unethical or illegal conduct in order to be successful. A similar percentage have seen wrongdoing in the workplace. Only about half say they would not commit the crime of insider trading if they could make $10 million and get away with it.

Such poll figures seem bleak. “When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk,” said Jordan Thomas, a partner at Labaton Sucharow.

The survey also helps explain why Barclays, and perhaps other banks, so cavalierly cheated in reporting the data on creditworthiness that sets interest rates for world markets each day. Or why employees at London-based HSBC, Europe’s biggest bank, allowed drug cartels, terrorists, and other criminals to launder money through its system.

Are the professionals in this industry always to blame? The survey reveals that a third of them feel pressure through bonus or compensation plans to violate the law or engage in unethical conduct. Only a quarter have faith that they will be protected if they blow the whistle on wrongdoing.

Banks need to place character reform – and ways to reinforce it – at the top of their priorities. Simply raising the fear of punishment or adding an army of regulators isn’t enough. Renewing the public’s trust means first making sure that bank workers are trustworthy.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to As bank scandals add up, a need for a culture of integrity in banks
Read this article in
https://www.csmonitor.com/Commentary/the-monitors-view/2012/0717/As-bank-scandals-add-up-a-need-for-a-culture-of-integrity-in-banks
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe