The Federal Reserve Bank of New York is beginning to take steps into the process of cleaning up the bad behavior and culture that is prominent on Wall Street. With the many recent scandals that have occurred, the general public’s trust in the financial industry is progressively diminishing.
William C. Dudley, president of the New York Fed, gathered Wall Street bankers for a conference on ethical culture in the beginning of November. He compared the current issue on hand to apples in that instead of searching for the bad apples, the focus should be on improving the apple barrels.
Mr. Dudley has begun this fix to Wall Street culture by helping assemble the Group of 30. This is a nonprofit organization whose purpose is to study economic and financial issues. It already plans on meeting with and reviewing banks to provide recommendations for cultural improvements. Furthermore, it would like to meet with these banks every 24 months to assess the progress on the implementation of these recommendations.
In addition to the Group of 30, Mr. Dudley has also gained the support of the vice chair of the Federal Reserve, Stanley Fischer, as well as the managing director of the International Monetary Fund, Christine Lagarde. Both agree that there is a long battle ahead, and Mr. Fischer had stated, “Even in the best barrels, there will always be bad apples, so we must keep up that fight.”
Ms. Lagarde interestingly referenced Immanuel Kant in her speech. She said “The goal of the financial sector must be not only to maximize the wealth of its shareholders, but to enrich society by supporting economic activity and creating value and jobs—to ultimately improve the well-being of people.”
Kant’s view on deontological ethics is that duties are absolutely binding, and it is these duties that set ethical standards. Therefore, one’s moral worth comes from acting out these duties. The issues on Wall Street stem from the failure on both the bankers’ and regulators’ parts to rigorously follow through with their duties. In Kant’s eyes, he would view much of the activity on Wall Street as unethical.
Despite his group of powerful supporters, Mr. Dudley undoubtedly has an uphill struggle ahead of him. He seeks to tackle the ethical issues on Wall Street from the top of the hierarchy, down; and plans on doing this through ethical conferences similar to the one held in the beginning of November. It will definitely take time until there are any noticeable or significant changes. However, Mr. Dudley’s strategy appears to show potential.
But, it should be noted that Mr. Dudley’s most powerful weapon in this battle is his fiery motivation to see change. According to Kant’s view of deontological ethics, the type of intention (whether good or bad) that a person has when making a decision can determine the ethicality of the decision. Mr. Dudley appears to have the strongest of intentions to make the system right again, justifying his actions as ethically correct.