Remaking Culture on Wall Street (eBook)

Henry Engler is senior editor for Regulatory Intelligence Editor in New York. He comes to Thomson Reuters after a decade in the financial industry in which he has served in roles as an executive or managing consultant overseeing compliance-related and other projects. These include projects in Dodd-Frank swaps reporting requirements, TRACE reporting, data requirements, tax and accounting matters, AML systems and employee transaction monitoring. Firms he has worked for include IBM Global Business Services, Morgan Stanley, and RBS Capital Markets. Before these roles Henry is a trained economist and has served as a financial journalist and business strategy executive at Reuters. He has edited books on the European Monetary Union and the future of banking.

Acknowledgements 5
Contents 7
1 Introduction 8
2 The Financial Crisis: The Culture Problem Emerges 14
Foreign Exchange: The Last Frontier 15
Libor Rate Rigging: No Room for Morals 20
Goldman’s ‘Abacus’: The Customer Comes Second 27
Wells Fargo: Breakdown in Governance 35
3 Culture and Organizational Size 44
The Bigness Crisis 46
Compositional Change: Growth of Transactional Model 47
Bigness Breeds Silos 48
Managing Diverse Cultures 50
4 Global Regulators: Limits on What They Can Do 54
Principles Instead of Rules 56
Executive Accountability: UK Senior Managers Regime 57
“Rolling Bad Apples” 59
Limits to Regulatory Patience 62
5 Enforcing Culture: Criminally Based Compliance 66
“The Surveillance State” 67
Rise of Culture Programs 69
Risk Mitigation Versus Trust Building 71
6 Behavioral Science: From Theory to Practice 73
Behavioral Science & Banks: “The Dutch Way”
Case Study: Royal Bank of Scotland 78
Formation of the Team in 2015 79
Behavioral Risk: How to Measure? 79
Review Selection Process 80
“Deep Dives”: How Do They Work? 82
Dissemination of Findings 83
Reactions from the Business 83
Independent Role Is Critical 84
Behavioral Risk Team: Right Mix of Skills 85
Noteworthy Observations 85
Uncovering Good and Bad Behavior 86
Choice Architecture: Initial Thoughts 88
7 U.S. Regulators: Requiring Behavioral Risk Teams 90
Bank Supervision: Facilitate or Lead? 92
Role for Business Schools 95
8 What Is Finance For? 98
Index 104