Rotten Culture: What Others Are Saying

Please note: this is a supplement to “Diamonds and Rust: The Need for Ethical Climate Change in Banking“, posted 9 July 2012

If you don’t understand what all the Libor fuss is about, here are some exemplary explainers and commentaries. The first batch comes from the U.K.; the second from American observers and experts.

  • The Economist is outraged: In “The Rotten Heart of Finance” it said the Libor scandal “corrodes further what little remains of public trust in banks and those who run them.” In “Banksters” the editors call for a clean-up, saying, “Popular fury and class-action suits are seldom a good starting point for new rules. Yet despite the risks of banker-bashing, a clean-up is in order, for the banking industry’s credibility is shot, and without trust neither the business nor the clients it serves can prosper.”
  • Up-to-the-minute coverage of the Libor scandal provided by the Financial Times and The Guardian give content and context to the fast-evolving story;
  • Perhaps my favorite: FT’s piece on “How traders trumped Quakers”, which describes the erosion of Quaker values of integrity and trust as Barclays banking culture moved from respectable (albeit elite) to something else. John Piender describes the battleground between retail and commercial bankers on the one side, and investment bankers on the other—and evokes Michael Lewis’ Liar’s Poker in the process.

As for what Americans are saying, take a look at:

  • Politico‘s backgrounder, with loads of hyperlinks, written by Cora Currier;
  • Dylan Matthewsexplainer in the Washington Post;
  • The elegant breakdown provided by Marketplace’s New York bureau chief Heidi Moore;
  • The insights provided by New York Times columnist Joe Nocera, who pointed out the reaction in the U.K. is far more intense than here, and that, “Once again, it leads one to believe that bankers feel neither the constraints of the law nor of morality”;
  • NYTimes business columnist Gretchen Morgenson’s call for American regulators to get cracking on similar reform. “It’s hard to believe, in the wake of the Libor mess, that Wall Street and its supporters in Congress would continue to battle against price transparency in any market. Then again, that’s precisely what they did after the credit crisis. With each new financial imbroglio, the gulf widens between Main Street’s opinion of Wall Street and the industry’s view of itself.” She should know: she’s an expert on how the Wall Street / Washington revolving door culture contributed to the  financial crisis

Most pungently, writing on GMI Ratings’ blog, governance expert Nell Minow justifiably dismisses broad-stroke spinning of the Libor story by calling it what it is. “The scandal is about price-fixing.  It is about a bank, or rather the executives and the board of directors of a bank.  It is about lying.  It is about crime.  It is about the ability of large, powerful private institutions to exploit the rules, undercut oversight, and avoid accountability.”


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