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Bank leaders condemn themselves

William K Black

If you inhabit the reality-based universe you know that finance has become a parasite that is a leading threat to our economies and democracies. A series of financial regulators – each of them infamous for their slavish apologias for bankers and banking – now admit that our most elite banks and bankers have created corrupt cultures that have turned the world’s largest banks into the world’s largest criminal enterprises.

How have top bank leaders reacted to this corruption? A new report [1] has asked bank leaders that question.

“Of note, the Industrial Products industry is the only one that views the risk related to the organization’s culture to be a ‘Significant Impact’ risk. It is interesting that other industries, particularly Financial Services, do not view this risk to be more significant given the recent spree of cultural lapses that have been reported.”

Bank leaders aren’t worried about their corrupt cultures or endemic frauds – they view their most “significant” risk to be regulatory interventions that might stop their frauds and send them to prison.

“The Financial Services and Energy and Utilities industries rated only one risk – regulatory changes and regulatlory scrutiny – as a ‘Significant Impact” risk.’”

Yes, that is precisely the job of financial regulators – providing effective “scrutiny” to break the Gresham’s dynamic caused by elite bank frauds. Fraudulent bankers recognize that the regulators are their only “significant” risk because regulators are the only ones they cannot hire and fire. Only the criminal referrals, training, documenttation, vigor, and expertise of regulators can lead the Department of Justice to prosecute elite bankers for the frauds they lead. Listen to the bankers – and insist on recreating effective, vigorous regulation. The elite bankers won’t fix the culture of corruption. They created the culture by setting the corrupt “tone at the top”. They are desperate to prevent real regulators from successfully undertaking the Herculean labor of cleansing the modern Augean stables of the City of London and Wall Street.



Assoc Prof William K Black, JD, PhD is a U.S. lawyer and author, and a former bank regulator. His expertise is in white-collar crime, public finance, regulation, and other topics in law and economics.

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