Has the industry learned from the global crisis?
Seven years after subprime mortgage lending and Wall Street investment maneuvering precipitated a global financial crisis, managers, lawmakers, regulators and law enforcement officials continue to debate the reasons for the 2008 debacle and the lessons still to be learned. Observers disagree about who was to blame, with bankers, regulators and homeowners all attracting censure. It is widely agreed, however, that ethical lapses in the financial services industry were an important cause. “Greed,” as one expert noted, “overran peoples' ethical foundations.” In response, a Democratic Congress passed the Dodd-Frank Act to protect consumers and to more closely regulate Wall Street. Republicans, however, now control Congress, and anti-regulatory champions are attacking the constraints put in place since 2008. A host of questions remain about ethics and the financial services industry. Is the industry behaving more ethically since the crisis? Can regulation compel ethical behavior? Should top executives be held personally responsible for their companies' mistakes? One skeptic put it succinctly: “Ethics and financial services—isn't that an oxymoron?”
“Doing Business Ethically: Lessons Learned,” Harvard Business School Press, 2009. Top global business leaders share their perspectives on the marriage of ethics and business practices.
Brooks, John, “Once in Golconda: A True Drama of Wall Street 1920–1938,” Harper & Row, 1969. Longtime New Yorker magazine writer captures a classic tale of extraordinary people and events during a tumultuous and formative era on Wall Street.
Donaldson, Thomas, and Patricia Werhane, eds., “Ethical Issues in Business: A Philosophical Approach,” 8th ed., Pearson, 2007. Textbook compiles essays on business ethics and moral reasoning by leaders in the field.
Kaiser, Robert, “Act of Congress: How America's Essential Institution Works, and How It Doesn't,” Alfred A. Knopf, 2013. Washington Post writer and editor goes behind the scenes to narrate the Capitol Hill battle over Dodd-Frank Act financial legislation.
Lewis, Michael, “The Big Short: Inside the Doomsday Machine,” W.W. Norton & Co., 2010. Best-selling author recounts how a handful of financiers cashed in on the mortgage securities bubble by betting that the subprime lending sector was ready to crash.
McDowell, Banks, “Ethics and Excuses: The Crisis in Professional Responsibility,” Praeger, 2000. A law professor (emeritus) describes ethical dilemmas and shares guidance on how to handle them.
McLean, Bethany, and Joe Nocera, “All the Devils Are Here,” Penguin Group, 2010. Financial writers for Vanity Fair (McLean) and The New York Times (Nocera) examine the background of the financial crisis via the actions of a variety of market and government players.
Stanton, Thomas H., “Why Some Firms Thrive While Others Fail: Governance and Management Lessons from the Crisis,” Oxford University Press, 2012. Financial researcher specializing in risk management extends and amplifies extensive research by the Financial Crisis Inquiry Commission.
Baer, Justin, “Morgan Stanley to pay $2.6 Billion to Settle Mortgage Cases,” The Wall Street Journal, Feb. 25, 2015, http://tinyurl.com/
Eisinger, Jesse, “Why Only One Top Banker Went to Jail for the Financial Crisis,” ProPublica and The New York Times, April 30, 2014, http://tinyurl.com/
Fiske, Rosanna, “Image vs. Reputation: Which Reigns Supreme?” Adweek, Jan. 20, 2011, http://tinyurl.com/
Johnson, Simon, “Financial Regulators' Fine Mess,” Project Syndicate, Dec. 30, 2013, http://tinyurl.com/
Kelleher, Dennis, “What's Wrong With JPMorgan Chase & Wall Street's Big Bank Earnings? Lots,” Better Markets blog, Better Markets, Oct. 14, 2014, http://tinyurl.com/
Zibel, Alan, et al., “Car Loans See Rise In Missed Payments,” The Wall Street Journal, Jan. 8, 2015, http://tinyurl.com/
Reports and Studies
“2014 Annual Report,” Office of Financial Research, http://tinyurl.com/
“2014 Annual Report to Congress on the Dodd-Frank Whistleblower Program,” U.S. Securities and Exchange Commission, http://tinyurl.com/
“Financial Crisis Inquiry Commission Report,” U.S. Government Printing Office, January 2011, http://tinyurl.com/
“HOPE NOW Reports 34,000-Plus Loan Mods Granted in November,” National Mortgage Professional Magazine, Jan. 14, 2015, http://tinyurl.com/
H.R. 4173, “Dodd-Frank Wall Street Reform and Consumer Protection Act,” http://tinyurl.com/
Baily, Martin Neil, Robert E. Litan and Matthew S. Johnson, “The Origins of the Financial Crisis,” Brookings Institution, November 2008, http://tinyurl.com/
Wilmarth Jr., Arthur E., “A Two-Tiered System of Regulation is Needed to Preserve the Viability of Community Banks and Reduce the Risks of Megabanks,” Research Paper No. 2014–53, George Washington University Law School, Oct. 31, 2014; available at SSRN, http://tinyurl.com/
The Next Step
Glazer, Emily, “As Regulators Focus on Culture, Wall Street Struggles to Define It,” The Wall Street Journal, Feb. 1, 2015, http://tinyurl.com/
Jankel, Nick Seneca, “Can Brands Be Enlightened?” The Huffington Post, Feb. 24, 2015, http://tinyurl.com/
Russell, Joyce, “Career Coach: The value of keeping an eye on ethics,” The Washington Post, Feb. 20, 2015, http://tinyurl.com/
Blackmore, Nicole, “Lenders ‘trapping’ borrowers who want to downsize,” The Telegraph (U.K.), Jan. 31, 2015, http://tinyurl.com/
McCormick, Liz, “U.S. Banks Hoard $2 Trillion of Ultra-Safe Bonds,” Bloomberg News, Feb. 22, 2015, http://tinyurl.com/
Zibel, Alan, “Lenders Step Up Financing to Subprime Borrowers,” The Wall Street Journal, Feb. 18, 2015, http://tinyurl.com/
Eavis, Peter, and Ben Protess, “She Runs S.E.C. He's a Lawyer. Recusals and Headaches Ensue,” The New York Times, Feb. 23, 2015, http://tinyurl.com/
Richardson, Hayley, “HSBC Embroiled in New Price Fixing Scandal,” Newsweek, Feb. 24, 2015, http://tinyurl.com/
Rudegeair, Peter, “U.S. Justice Dept questions JPMorgan over auto lending practices,” Reuters, Feb. 24, 2015, http://tinyurl.com/
Ahmed, Kamal, “HSBC whistleblower: There are ‘more revelations,’” BBC News, Feb. 13, 2015, http://tinyurl.com/
Hall, Cheryl, “Citigroup whistleblower still on the trail of the too-big-to-fail,” The Dallas Morning News, Feb. 14, 2015, http://tinyurl.com/
Norman, Tessa, “FCA to force banks and insurers to protect whistleblowers,” Money Marketing, Feb. 23, 2015, http://tinyurl.com/
Bank for International Settlements
Centralbahnplatz 2, 4051 Basel, Switzerland
(+41 61) 280-8080
Switzerland-based organization that acts as a bank for central banks globally and a hub for financial information; supports the international banking standards procedure known as the Basel Process.
1825 K St., N.W., Suite 1080, Washington, DC 20006
Group established in 2010 that lobbies for tighter oversight of capital and commodity markets.
Consumer Financial Protection Bureau
1700 G St., N.W., Washington, DC 20552
Federal agency established by Dodd-Frank Act to oversee consumer financial products and services, including many mortgage originators.
Securities and Exchange Commission
100 F St., N.E., Washington, DC 20549
Primary U.S. federal agency with oversight of financial markets; its Office of the Whistleblower (www.sec.gov/