New York Federal Reserve Bank President Dudley Discusses Improving Culture in Financial Services Industry (with Lofchie Comment)

At the Workshop on Reforming Culture and Behavior in the Financial Services Industry, Federal Reserve Bank of New York President and CEO William Dudley delivered remarks in which he explained that improving culture is "an imperative" that will ensure long-term financial stability and public trust in the financial system.

Mr. Dudley said that he sees culture as an existing problem within the financial services industry, and went on to describe how incentives could be improved to encourage better culture and behavior. He suggested that the incentives to be improved include changing employee compensation and how firms respond to wrongdoers.

Lofchie Comment: The notion that "culture" within the financial services industry is uniquely bad is questionable. Compared to what other industry – compared to government? Compared to academia? This is not to say that misconduct is nonexistent in financial services; of course it exists, just as it does in other human endeavors. Still, this line of criticism about financial services culture is a slippery slope insofar as it could serve as the basis for the government to take discretionary action to assert its authority over the uncultured.

See: Mr. Dudley's Speech.
Related news: FRB Governor Tarullo Remarks on Quality Compliance, Incentives and Role of Government in Discouraging Bad Actors (with Lofchie Comment) (October 20, 2014).