Based on the discussions among panelists and attendees, it was evident that industry participants have taken onboard the directive that cultural and behavioral change is needed in the industry. A number of firms have begun to implement programs that are at various stages of depth, breadth and maturity. There were a few key themes that emerged that I want to share with you today: •  The role of regulation: There was a lot of discussion on the potential role of regulators and the public sector in developing and maintaining appropriate cultures at financial firms. While some voiced the opinion that regulators must play a role, others clearly indicated that trying to regulate something as dynamic and amorphous as culture would be counterproductive and would overstep the purview of regulators. I tend to agree. Of course, regulation is one thing; supervision is another. Culture may not be amenable to official rulemaking, but it falls squarely within a banking supervisor’s responsibility for financial stability. Financial institutions should expect greater supervisory attention to culture. •  Industry-led effort vs. first mover: Using the United Kingdom’s Banking Standards Review Council as an example, we believe that meaningful change will require an industry-wide effort. At the same time, the “first mover” issue fostered a general sense of skepticism around whether any firm would be willing to take on the risk of implementing a compensation structure, for example, that was dramatically different from others in the industry.
Before turning to the road ahead, I wanted to pause and recognize two things. First, it’s clear that progress has been made across the industry in a number of areas – particularly in making firms and the system more resilient through improvements in capital and liquidity, as well as enhancements in risk management, including capital planning and stress testing across the range of risks firms face. But, in the remaining two areas of the Framework– less complex and better managed – I think it’s safe to say that despite the fact that firms are addressing a number of outstanding issues, these areas continue to present challenges in reaching the desired end state. As I’m sure you would agree, we collectively still have quite a bit of work to do to fully implement the changes required under new rules and regulations. While it is important to take stock of the changes made over the past few years – first, to assess the impact of those changes, both intended an unintended; and, second, to understand the contours of the “new” financial system operating under a plethora of new rules and regulations, both national and global in nature – we must acknowledge that some of the changes necessary have yet to be fully implemented. We must continue to devote sufficient attention and resources to complete the efforts. And, firms and supervisors will continue to face challenges and competing demands as we press ahead on reform efforts in the coming months and years.