Few would disagree with the following: The bad behavior that contributed to the Financial Crisis was evidence of a culture that was not strongly ethical. Let me also pose a challenge to those who are skeptical about the benefits of a strong ethical culture: If this is not a suitable method to prevent bad behavior by bankers, what alternative proposal do you advocate? The status quo is not acceptable. As a wise man once said, “Plan beats no plan.” The components of a strong ethical culture So what are the key components of a strong ethical culture? It is said that lawyers love a metaphor, and this lawyer is no exception. I like to think about ethical culture as if it were a package. The culture that we will have is derivative of what we put into the package, and there are clear choices to be made. The contents depend upon the type of organization, the kinds of people, and the nature of the skills needed to conduct the organization’s activities. Time will not permit me to cover this thoroughly, so let me cover a few items with a very broad brush. What goes in For starters, the conduct of the people in any organization will be strongly influenced by incentives. Let me mention the “big three.” Bankers, like lawyers, want to do [1] quality work, [2] with people they like and respect, and [3] receive fair recognition in return.
8  The Archbishop offered these comments at an October 12, 2014 panel discussion that was part of the International Monetary Fund 2014 Annual Meetings. A video of that discussion is available at http://www.archbishopofcanterbury.org/articles.php/5426/archbishop‐to‐take‐part‐in‐imfworld‐bank‐panel‐ onethics‐and‐finance. Notably, the Archbishop described his role at the conference as a “lion in a den of Daniels.”  9  Even the skeptics of cultural reform concede that there is “almost universal accord that remuneration structures contributed to excessive risk‐taking in financial institutions and that excessive bonuses paid on anticipated accounting profit at the time of deal origination distorted decision‐making and resulted in asymmetric riskholding.” Paradigm Risk Consulting, To boldly supervise . . . , February 2014. 10  See Dudley, Enhancing Financial Stability by Improving Culture in the Financial Services Industry, supra n.4. 4  BIS central bankers’ speeches