4  E. Gerald Corrigan, Are Banks Special?, Federal Reserve Bank of Minneapolis Annual Report, January 1983. Cf. Joseph Story, Commentaries on the Law of Bailments § 464 (1832). (“The soundness of the public policy of subjecting particular classes of persons to extraordinary responsibility, in cases where an extraordinary confidence is necessarily reposed in them, and there is an extraordinary temptation to fraud, or danger of plunder, can hardly admit of question; and has been recognized in the jurisprudence of many countries.”). BIS central bankers’ speeches  1  Industry responsibility Two years ago, I noted that recent scandals in banking evidenced “deep-seated cultural and ethical failures.” 5 Many of the industry’s leaders now agree. According to the Federal Advisory Council of the Federal Reserve System, a group composed of senior representatives from the industry, “as often as not [...] the challenges faced in recent years have been behavioral and cultural; post-crisis episodes such as LIBOR and foreign exchange manipulation provide hard evidence that there remains work to be done.” 6 Last year I argued that “the solution [to cultural problems] needs to originate from within the firms, from their leaders.” 7 I view today’s workshop as a progress report on the industry’s efforts. This is an opportunity for us to discuss collectively what is working, what is not, and the next steps that are needed. We should take care, though, not to confuse cause and effect. The banking scandals that followed the financial crisis are evidence that something fundamental is wrong.
One question on the minds of many in the official sector is, “what is the most effective way to promote reform?” Sharing ideas on leading practices, challenges and the opportunities for industry collaboration is a start – but it is not the end. Financial firms need to act on this information, and the official sector should hold institutions accountable for demonstrating sustained, observable progress. Overview of agenda Let me now give a brief overview of today’s agenda. The first panel will present the Group of Thirty’s recent report on banking conduct and culture, which calls for fundamental and  5  William C. Dudley, Ending Too Big to Fail, Remarks at the Global Economic Policy Forum, November 7, 2013. 6  Federal Advisory Council and Board of Governors, Record of Meeting, May 8, 2015. 7  William C. Dudley, Enhancing Financial Stability by Improving Culture in the Financial Services Industry, Remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry, October 20, 2014. 8  See, e.g., Mirea Raaijmakers, ed., Supervision of Behavior and Culture: Foundations, Practice & Future Developments, De Nederlandsche Bank (2015). 2  BIS central bankers’ speeches  sustained change. As you all know, the Group of Thirty is a forum consisting of senior public officials and private sector bankers. Its purpose is to facilitate non-partisan discussion of issues that threaten global economic stability and economic progress.