They were not two remote tail risks that both happened to materialize, or just a bad coincidence. There have been too many examples of other misconduct to list. Wells Fargo is the most recent example, but serious misconduct is not confined to a single jurisdiction or a business model. The evidence, which now stretches over a decade, has only reaffirmed my initial belief that there is an industry-wide problem. In light of these continuing and widespread failures, my colleagues and I recognize the importance of culture—that is the unwritten norms and accepted practices of an organization. The culture of each firm will necessarily be its own. But the pervasiveness of problems—across firms and countries—points to common, industry-wide norms that need attention. An industry-wide problem needs an industry-wide solution. I also think that, when the problem is cultural, any solution must be industry-driven. It is the public sector’s job to establish and enforce rules, but rules face some inherent limits in shaping conduct and behavior. It is natural to adapt to the behaviors that we observe around us. A common illustration of this point is the speed limit. Most drivers move with the flow of traffic. They pay less attention to a number posted on a sign. This is not to deny the necessity and importance of regulation, or to criticize any of the particular rules imposed in response to the financial crisis. But, we also must recognize that it is impossible to create a rule for every situation.
I doubt that rules alone can accomplish this. Telling people to be ethical doesn’t make it so. Seeing others engage in ethical decision-making is, by contrast, quite powerful. With that prologue, let me turn to my first message: Stay in banking. This might be a surprising message in light of my introduction. Nonetheless, banking is important work. Society relies on its financial system to “create substantial value for our society.” 3 As investor and author John Bogle has written: “[Banking and finance] facilitate the optimal allocation of capital among a variety of users; it enables buyers and savers to meet efficiently; it provides remarkable liquidity; it enhances the ability of investors to capitalize on the discounted value of future cash flows, and other investors to acquire the right to those cash flows; it creates financial instruments [. . . ] that enable investors to assume additional risks, or to divest themselves of a variety of risks by transferring those risks to others.”4  To fulfill its potential for creating value for society, the financial system needs talented and dedicated people at the helm. This is especially true for banks, which are indispensable to our economic system. As the philosopher Onora O’Neill has observed, banking requires more than just technical competence.5 Bankers must reproduce their efforts and results with reliability. And, above all, bankers must be honest. They must do what they say and say what they mean. This is necessary for the financial system to be viewed as trustworthy.