After a decade of committing tens of thousands of felonies that the U.S. government believes helped fund terrorism and Iran’s development of nuclear weapons, having the great fortune of settling the cases without any senior officers being prosecuted or its license to operate in the U.S. being pulled, having immediately violated the settlement agreement by lying about its prior actions, being discovered to have mislead the U.S. during the settlement negotiations, and being found to have continued to violate the same U.S. laws after entering into the settlement, one might think that Standard Chartered’s leaders would learn to keep their mouths shut and to obey the law at least until the settlement agreement restrictions lapse. Standard Charter’s senior leadership, however, is composed of the most arrogant and entitled class. When the bank’s Chairman of the Board is “Sir John Peace” entitlement (but no longer noblesse oblige) comes naturally. So, instead of mea culpa, the Standard Chartered mantra is: how dare you criticize us?
The latest example of this is one of the bank’s senior leaders complaining that the U.S. regulators and (non) prosecutors are treating the bank’s criminal acts as criminal. If that sounds like irony, I can assure you that these banksters are not capable of it.
Forget for a moment your personal views on whether Iran is seeking to develop nuclear weapons. That question is not within my areas of expertise and is not discussed here. I guarantee that Standard Chartered’s officers did not aid Iran in evading U.S. sanctions because they conducted an investigation and determined that that Iran was not actually seeking to develop nuclear weapons. The first point to keep in mind is that Standard Chartered’s officers enthusiastically aided Iran’s evasion of U.S. sanctions knowing that the U.S. believed that Iran was developing nuclear weapons and that such bank fund transers were aiding that development.
The second, and more telling point, is that Standard Chartered’s officers’ conduct indicates that they would enthusiastically aid any nation in violating sanctions in order to develop, deploy, and use weapons of mass destruction for genocidal purposes. If Iran isn’t that nation then we will all have experienced immense luck that Standard Chartered’s officers’ crimes didn’t lead to massive losses of life. Does anyone think we will continue to be that lucky if the officers that control our banks continue to seek profit by aiding nations in evading international sanctions?
It’s not that Standard Chartered’s officers want to aid genocide. It is simply that there is a substantial group of them who do whatever produces large amounts of short-term reported income because doing so maximizes their compensation and their likelihood of promotion. It does not matter whether that short-term reported income is real and it does not matter whether the activity that produces the short-term reported income is grotesquely immoral. The fundamental fact that one must keep I mind is that the scummier the client the more they are willing to pay the banker to aid their crimes. Bank compensation systems are so perverse that they create powerful incentives to aid the world’s worst people – dictators who are kleptocrats, terrorists, and nations that support terrorism.
The Guardian had some well-deserved fun with Standard Chartered’s complaint that the U.S. was treating it as a criminal and Standard Chartered’s leadership’s inability to avoid violating our one of our two family rules: “when you find yourself in a hole; stop digging.”
“But here we go again. This time it is Jaspal Bindra, who runs the bank’s business in Asia and thus is a big cheese at Standard. He thinks it’s terrible that banks are being treated ‘like criminals’ when money-laundering rules are broken. He argues that the banking industry’s role on money-laundering is akin to that of policemen and that the odd ‘lapse’ will sometimes occur. Further, the level of fines is “quite difficult” for banks.
It’s a point of view, and you’ll find many bankers who share it in private. But did Bindra not get the Standard memo about the importance of keeping your mouth shut?
Remember the recent history here. In 2012, Standard paid fines of $667m (£396m) for breaching US money-laundering sanctions against Iran. An inflammatory sub-plot in the case was a remark attributed to Richard Meddings, Standard’s finance director at the time: ‘You fucking Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?’ Meddings, apparently, denied making the comment but Benjamin Lawsky, the New York regulator on Standard’s tail, put it in the documentation.
Then Sir John Peace, Standard’s chairman, definitely put his foot in it last year by calling the offences ‘clerical errors’ and not ‘wilful acts’. For that, Peace was obliged to make a grovelling apology, in which he had to remind the world that Standard ‘unequivocally acknowledges and accepts responsibility … for past knowing and wilful criminal conduct.’
Bindra’s remarks are not in the same league as Peace’s. But the timing could hardly be worse. Standard revealed this week that it expects to pay yet another fine to New York’s financial regulator to cover fresh cases of failing to report suspicious transactions.”
Financial Whores Pretending to Virtue
My regular readers know that I am going to invoke our other family rule: it is impossible to compete with unintentional self-parody. Standard Chartered was the supposed good bank – you know, like JPMorgan here in the U.S. The self-praise its PR flacks generated was itself very funny, in a sick and delusional kind of way.
Benjamin Lawsky, America’s most vigorous enforcer, noted in footnote 7 of his August 6, 2012 complaint that revealed that Standard Chartered was a criminal enterprise, noted its pretensions to integrity.
According to SCB, its success as a bank is due in part because it is “trusted worldwide for upholding high standards of corporate governance.” SCB prides itself for having a “distinctive culture and values [that] act as a moral compass.” It boasts “openness” as one of its “core values” and claims to aspire to be “trustworthy.” It also markets itself to clients and the investing public as “always trying to do the right thing.”
On August 1, 2012, five days before Lawsky filed his complaint, at a time when Standard Chartered leaders knew that Lawsky’s investigators had documented that Standard Chartered officers had caused it to commit tens of thousands of criminal acts for a decade – and to cynically create training manuals that taught its staff to hide those violations from the United States – Standard Chartered’s two top leaders brazenly praised the bank’s unique commitment to virtue in their missives to shareholders. Sir John Peace, the Chairman of the Board, claimed that the bank did so well because it was so much more ethical than rival banks.
“In recent weeks, issues have surfaced around governance and behaviour in banking. At Standard Chartered, we believe it is not just about what we do, but how we do it. Our culture and values continue to be a source of strength and a competitive advantage. Strong corporate governance and an obsession with the basics of banking remain key areas of focus for our Board.”
It’s a bit subtle, but he soon bragged about a fact that should have been a terrible warning. When reading what Peace wrote please recall that inflation and interest rates were extremely low in 2012 and that banking competition is intense, which holds down (honest) profit margins.
“With normalised return on equity (ROE) at 13.8 per cent, we remain on target to reach our key financial objective of mid-teens ROE over the medium term.”
That reported return (13.8%), and that “key financial objective” (15% ROE) are both dangerously high. Both numbers are way “too good to be true.” They indicate that Standard Chartered was taking far too much risk and/or had customers willing to pay premium fees or interest rates for high volume transactions. They also indicate that Standard Chartered intended to increase those dangerous practices rather than correct them. Very risky banking should not produce consistent record profits.
A bank run honestly, but addicted to taking the kind of risk required to earn those ROEs should demonstrate great variability in earnings, particularly during a Great Recession. Remember how (after the collapse) economists rushed to say that Bernie Madoff’s Ponzi scheme should have been obvious to his investors because his reported returns (which were materially lower than Standard Chartered’s reported returns, and substantially lower than its “key financial objective” (15%)) were too high to be earned consistently. (Recall that Madoff was operating largely in a long boom.) The Economist famously denounced Madoff’s often financially sophisticated victims in an article subtitled: “Dumb money and dull diligence.”
Peace (correctly) assumed that economists were too ignorant about fraud schemes to remember in 2012 what economists said about Madoff (and his victims) in 2008 and 2009. This is another reason that criminologists and competent regulators realize that the typical economist makes a terrible regulator and risk analyst. Of course, John Kenneth Galbraith was far from the typical economist and The Economist article about Madoff aptly quoted him (before the magazine fell into its current sharp decline).
“Writing about one of the great swindles of the 1930s, J.K. Galbraith pointed to three traits of any financial community that he believed put it at risk of fraud. There was the tendency, he wrote in 1961, to confuse good manners and good tailoring with integrity and intelligence. There was the sometimes ‘disastrous interdependence’ between the honest man and the crook. And there was the ‘dangerous cliché that in the financial world everything depends on confidence. One could better argue the importance of unremitting suspicion.’”
The Economist, sadly, can barely bring itself to episodic skepticism when it comes to the elite bankers that led the fraud epidemics that drove our financial crises. Indeed, it has shilled shamelessly for those banksters by claiming that they are the victim of “extortion” by our (pathetically weak) Department of Justice.
What SCB’s leaders would know if they had “an obsession with the basics of banking”
One of the “basics of banking” is that the people willing to pay bankers premium fees for handling very large amounts of money are often the worst customers – dictatorial kleptocrats, drug dealers, terrorists, and elite white-collar criminals. Bad customers seek out bad bankers and bad bankers make bad banks.
This was exemplified by BCCI, which was known informally as the “Bank of Crooks and Criminals International.” As savings and loan regulators we made lenders reporting exceptional profits our top examination, enforcement, and receivership priority because they were overwhelmingly accounting control frauds.
Peace’s August 1, 2012 statement stressed Standard Chartered’s devotions to its customers, which is a good thing when the customers are normal. It becomes perverse when its customers are the problem. At the time he made the written statement Peace knew that the bank’s customers were the problem and that Lawsky’s investigators had documented that fact.
Peter Sands, Standard Chartered’s CEO, provided a written statement that followed Peace’s statement. Sands demonstrated his gift for unintentional self-parody by describing fraudulent banking operations to suspected terrorists as evidence of his embrace of “boring” banking.
“It may seem boring in contrast to what is going on elsewhere, but we see some virtue in being boring. We have stuck to our strategy – focusing on our markets in Asia, Africa and the Middle East, supporting our customers and clients, maintaining a tight grip on the business. We have held true to our values, to the spirit of our brand promise, Here for good – taking a long term view, always trying to do the right thing.”
[As an aside to those primarily interested in MMT, Sands’ letter also reveals his failure to understand even the most basic aspects of money and macroeconomics.]
Sands’ repeated and extended Peace’s ode to customers.
“[W]e engage intensively with our clients as partners, actively helping them navigate the challenges they face, and grab the opportunities they see. In our view, that is what banks should do, and what they are for.”
Sands’ then doubled down on Standard Chartered’s uniquely ethical culture.
“Culture and values
Taking a longer-term view of our business is one of the underlying tenets of our strategy and culture. We build longstanding relationships, we don’t grab transactions. We build sustainably profitable franchises, we don’t have proprietary trading desks. We build businesses that deliver a wider social and economic benefit. We are selective and turn things down that we don’t understand, or don’t like the look of.
Our culture and values have never been more important. As a source of competitive advantage, as the ultimate protection against risk, our culture and values are our first and last line of defence.
Doing the right thing. Supporting our customers and clients through good times and bad. Being Here for good. These may sound like glib phrases, but they underpin why Standard Chartered stands out, underscore why we are on track for ten years of record profits. For me as CEO, our culture and values are a top priority, something we can never take for granted – something we embed in our systems of measurement and reward.”
Actually, the phrases don’t sound “glib.” They sound mendacious and hypocritical. Sands is the one who made the calculated lie that the tens of thousands of felonies committed at the bank while he was its CEO were unintentional “clerical errors.”
We are not talking about “rogue” employees. Standard Chartered’s controlling officers created the perverse compensation systems that guaranteed widespread crime. The same controlling officers maintained those perverse compensation systems after pervasive criminality dominated many Standard Chartered operations and were institutionalized as standard operating procedures. The same controlling officers – after admitting their wrongdoing – falsely claimed that the bank had only made some inadvertent paperwork errors.
Standard Chartered’s Metaphor That it is Like a Cop
Standard Chartered is the crook, not the cop. Standard Chartered made money, lots of money, by helping commercial entities evade U.S. sanctions on Iran designed to discourage its development of nuclear weapons and commercial and private entities trying to evade U.S. sanctions on aid to terrorism. Standard Chartered posed as an honest bank while actually functioning in many of fits operations as a criminal enterprise.
But it gets much better, because HSBC and Lloyds’ Leaders Joined in SBC’s Whines
Having one of SBC’s top leaders complain that SBC was being treated as “criminal” when it was criminal is roll on the floor funny, but the same Guardian article noted that two of its giant UK counterparts decided to join the chorus supporting SBC’s complaint. Both of those choral counterparts offer further proof of our family rule that it is impossible to compete with their unintentional self-parody.
HSBC is horribly worried that bank fraud will be reduced
“Bindra’s remarks come in a week in which the pace of regulatory change and demands imposed by regulators across the world have become the subject of public debate. Douglas Flint, the chairman of HSBC, on Monday used unusually strong language to warn of an “observable and growing danger of disproportionate risk aversion” among staff who were fearful of fines.
HSBC was also fined £1.2bn in 2012 for system failures that allowed the bank to launder money, including for Mexican drug cartels.”
Consider the classic euphemism contained in the last sentence – “system failures.” HSBC managers knowingly aided the Sinaloa drug cartel – one of the most violent in the world – to launder what was likely to have been over a billion dollars. This has nothing to do with a “system failure” and everything to with the controlling officers creating a criminogenic environment at a massive bank by crafting perverse incentives through their compensation systems. We would very much like HSBC and other banks to create positive incentive and ethics systems that made employees and managers reject aiding money laundering. “Risk aversion” is an unrelated concept.
HSBC is a recidivist criminal enterprise. In addition to massive money laundering on behalf of Mexican drug controls it made and sold massive amounts of fraudulent liar’s loans, conspired to rig Libor, conspired to rig foreign exchange transactions, and cheated and abused enormous numbers of customers through improper PPI sales (an anti-consumer scam that became endemic in the moral wasteland that the City of London became when it “won” the regulatory “race to the bottom.” HSBC’s controlling officers are as culpable as any bankers in the world in causing the global financial crisis – and they have the nerve to warn us about the “danger” of taking action against their frauds.
The failure of DOJ and the federal regulators to take meaningful actions against its senior officers and the bank itself is one of the major obscenities of the crisis. HSBC should have been put through a receivership that split it into multiple banks that no longer posed a global systemic risk and appointed managers of exemplary skills and integrity.
Lloyds’ controlling officers fear that bank fraud will be reduced
The Guardian ends by quoting Lloyds’ criticisms of U.S. bank fines and UK proposals for enforcement changes.
“Among other of the new rules being imposed on bankers in Britain, are those which reverse the burden of proof and require them to prove their innocence. These have been questioned by the boss of Lloyds Banking Group, António Horta-Osório. He told Sky News: ‘Enforcement and fines have an important role as a credible deterrent against future misconduct. But the new rules will potentially reverse the burden of proof where individuals are guilty until they prove themselves innocent in the eyes of the regulator.’
‘I worry that this could incentivise people to do nothing, as they could waste their time trying to create a paper trail rather than doing what they should be doing, focusing on customers,’ Horta-Osório said.”
HSBC and Lloyds were two of the four largest abusive sellers of PPI product in the UK. Both of them “focused[ed] on customers” as targets of their predation and created perverse incentives through their compensation systems that led to the endemic exploitation of those customers. Further, the banks frequently falsified the “paper trail” in order to hide their abuses and attempt to evade the (long-delayed) regulatory requirements to repay their abused customers. Similarly, the (exceptionally weak) UK financial regulators found that the same banks sold abusively sold complex interest rate swaps to even small, unsophisticated businesses. Lloyds and Barclays were particularly despicable when it came to PPI abuses. They filed the litigation that delayed their victims’ recoveries. The British Bankers Association, at the behest of the four giant banks that committed the overwhelmingly number of the abuses, then filed a suit to further delay the victims’ recoveries. The 2013 UK Parliamentary inquiry report was scathing about the giant City of London banks’ refusal to deal honestly with the endemic exploitation of customers.
28. Major banks and some senior banking executives remain in denial about the true extent of PPI mis-selling. Over a significant period of time they ignored warnings from consumer groups, regulators and parliamentarians about PPI mis-selling. They used legal challenges to frustrate and delay the actions of the FSA, the FOS and the Competition Commission. Rather than upholding high levels of professional standards, senior executive pursued a box-ticking approach to compliance, adhering only to the specifics of their interpretation of the regulator’s detailed rules in this area, rather than pursuing an approach to selling PPI that was truly in keeping with the spirit of the FSA’s requirement that firms have a duty to treat their customers fairly. The IRHP and PPI mis-selling debacles both highlight how banks appeared to outsource their responsibility to the regulator; banks must not be allowed to do to this again if future scandals are to be avoided; and bank executives must demonstrate that they have changed significantly their cultural approach to selling products to customers if trust is to be fully restored to the sector.
Collectively, because the big four banks crafted perverse compensation systems that made the PPI and swap scandals endemic and then caused the abuses to fester by delaying and reforms or restitution, the losses to consumers and firms grew so large that even the UK regulators were forced to address them by public pressure. The PPI and swap scandals have led to the largest financial assessments against the massive City of London banks.
Even after these scandals were widely publicized the big banks’ reaction was to aggressively attack the victims in the claims process, particularly though bad faith denials of relief, as the UK parliamentary report emphasized. Note HSBC’s and Lloyds’ disgraceful records.
524. Every six months, the FOS [Financial Ombudsman Service] publishes a range of firm–specific statistics relating to customer banks’ complaints. One of the most important of these statistics relates to the FOS’ uphold rate in favour of customers. A high uphold rate by the FOS in favour of a customer could be seen as indicative of multiple failings of the bank on behalf of a customer as this represents not only poor levels of complaint handling service at the bank, but also poor service standards in relation to the nature of the root cause of the customer’s complaint itself. PPI complaint uphold rates across the industry are currently much higher than is the case with respect to other financial products such as home finance and pensions. The latest FOS statistics, for the period of 1 July to 31 December 2012 show the following extremely high PPI uphold rates: for example, Black Horse (part of Lloyds Banking Group) 97%, CitiFinancial (part of Citibank) 94% and HFC (part of HSBC) 83%.
I will discuss the PPI and swap scandals in more detail in a subsequent article, but for now it is enough to emphasize that the data, and the big banks’ own excuses for their behavior in selling both products, allow clear logical conclusions about the banks’ controlling officers.
- The effort to sell undesirable financial product to consumers and small business owners was a deliberate strategy that was maintained for many years
- The effort was viewed by managers as essential to the big banks’ profitability
- The effort was the deliberate product of compensation and management practices by the banks that made the sale of undesirable financial product endemic
- The City of London’s financial regulators ignored he problem because of their ideological view (itself a product of the regulatory race to the bottom) was that it had no responsibility to prevent banks from engaging in predatory practices
- Behavioral economics was proven in that consumers and most small business owners overwhelmingly succumbed to the bankers’ predation and acted in an economically irrational manner in purchasing these products
The City of London’s Anti-Regulators and Fraud Apologists Still Rule
It isn’t only Standard Chartered’s senior managers that are shocked that a criminal bank and its banksters might be treated like a criminal. (Of course, neither the bank nor the banksters were treated in that manner. If they had been, Standard Chartered would be banned from doing business in the U.S. and the banksters would be in prison – and subject to U.S. orders of “removal and prohibition” from the industry plus the seizure of all of their fraud proceeds.) But key leaders of the City of London have been quick to spread the meme that Standard Chartered is the real victim and Lawsky is the villain. My favorite example is this rant.
“New York authorities had claimed that Standard Chartered schemed for nearly a decade with Iran to hide 60,000 transactions worth $250 billion from regulators. The bank has maintained that the transaction value of the laundering activities had totaled only $14 million.
‘Whilst disproportionate, the settlement protects shareholder and customer interests against the regulatory assault,’ Ian Gordon, a banking analyst at Investec in London, said in a research note to investors. ‘In our view, Standard Chartered has acted with pragmatism and integrity in the face of extreme provocation.’”
Gordon is a man of his convictions who has little use for facts. He is a sucker for one of the oldest cons in the game – charitable contributions. (This is another variant of J.K. Galbraith’s warning, paraphrased above, that we must not “confuse good manners and good tailoring with integrity and intelligence.”)
“Ian Gordon, banking analyst at Investec, described the US regulators’ move as ‘unexpected and ferocious attack’.
Gordon said: ‘Standard Chartered is not an ordinary bank. It has a proud reputation, a management team of high integrity, and is known for its magnificent work with the charity Seeing is Believing. It is of grave concern to see its reputation sullied before the facts are known.’”
Yes, the officers that control the bank cause it to make large contributions to a worthy charity. The people that run the charity know that “banks” don’t decide on such contributions – bankers do – so they make sure that they praise the bank’s controlling officers on high profile occasions when elites abound. (No one outdoes the UK in sucking up to financial elites, though U.S. politicians try.)
When it was revealed that Standard Chartered’s promised creation of an effective anti-money laundering program had failed and resulted in large numbers of continued transactions with a greatly elevated risk of crime not being reviewed and Lawsky fined the bank for violating the terms of the settlement, Gordon did not reappraise his view of the banks’ leadership. He doubled down on his criticism of Lawsky enforcing the law.
“As part of that agreement an independent monitor was installed at the bank by the DFS, which discovered that Standard Chartered had failed to detect ‘a large number of potentially high risk transactions’.
Investec securities analysts Ian Gordon called the scale of the fine imposed by the DFS ‘distinctly unwelcome’ adding it ‘appears disproportionate’.
But he said he believed the scale of the impact on Standard Charted would be ‘contained’.
‘Our initial view is that the adverse earnings impact of the temporary remedial measures should be contained to 1% to 2% of group earnings,’ Mr Gordon added.”
A fine for a recidivist that violated its (none too tough) settlement agreement promises that is at most “1% to 2% of group earnings” is “disproportionate” – by which Gordon means way too large! Gordon doesn’t even want the City of London’s biggest banks to be subject to a slap on the wrist.
Reputation and the CEOs that Ran Standard Chartered
Americans who are not financial geeks are unlikely to have heard of SCB’s controlling leaders, but their power is legendary and their reputation was enhanced in the UK rather than reduced by their conduct of the bank. The same Guardian article that quoted Gordon praising the banks’ donations to a charity gives a synopsis that explains how leading frauds, and covering up those frauds, often enhances the controlling officers’ reputation.
Sands is one of the few bankers to remain at the top of their institution through the financial crisis after taking the top job in 2006. During his tenure, he more than doubled the number of employees from 28,000 to more than 80,000 and could seemingly do no wrong. He has been close to successive governments and used the bank’s central London offices to host meetings with ministers and civil servants at the height of the downturn, creating the scheme for taxpayers to save RBS, HBOS and Lloyds. His reputation surged, helped by the decision to waive his £2m bonus in 2010, and he had been mooted as the next governor of the Bank of England. More recently he was part of the review into university funding, which suggested fees rise to £9,000-a-year, and is a non-executive director at the Department of Health.
The polite finance director had been one of the front-runners to replace Bob Diamond at the helm of Barclays. He worked there as group financial controller before joining Standard Chartered in 2002 and was finance director of Woolwich when it was bought by Barclays in 2000. At Standard Chartered the married father-of-three was group executive director responsible for risk, and is said to have been on a list of those warned by the bank’s US chief executive about the potential problems in dealing with Iran in 2006. A month later he was named finance director. In 2008, amid the financial crisis he advised the government at the height of the financial crisis and more recently he has been fending off questions about whether the bank will move its HQ overseas.
The fast-talking Welshman was a virtual unknown outside banking circles before he was named chief executive of Standard Chartered in 2001, having previously run the bank’s Asian operation. The football and rugby fanatic, who started his career with the bank in 1993 after 10 years at Citibank, quickly built a solid reputation and impressed politicians. After five years as CEO, he was promoted to chairman in 2006 – in breach of corporate governance codes. Gordon Brown appointed him chairman of his Business Council for Britain in 2007 and at the height of the banking crisis Davies helped provide the outline to the bailout. He was given a life peerage and became trade minister under Lord Mandelson, although Brown was keen to make him RBS chairman. He is the government’s board diversity czar and is calling for more women in boardrooms.
We can be much blunter than the Guardian about Meddings. Lawsky’s complaint reveals that the bank’s U.S. risk officer told Lawsky’s investigators that he warned Meddings about the massive violations and the risk that they could send Meddings – and the U.S. risk officer to prison (if we had real prosecutors). The U.S. risk officer revealed that Meddings response was: “You fucking Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”
Actually, we can be much blunter than the New York Times, which bowdlerized Lawsky’s complaint when reporting on Meddings’ FU message in order to avoid embarrassing the millions of children who read the financial section of its paper.
“According to the order, the response was hostile, denigrated Americans and asked: ‘Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.’”
Personally, I want to know (without being required to find the complaint and read it) that the response by an officer of one of the world’s largest banks who was promoted for protecting a massively fraudulent operation that the U.S. government believes was helping to fund terrorism and Iranian nukes, who in 2008 “advised the government at the height of the financial crisis,” and who was on the short list to run Barclays (one of the world’s largest criminal enterprises singled out for special criticism by the UK parliamentary inquiry) to a warning of massive criminality was to launch an obscene rant on the U.S. Oh, and as chief risk officer it was his job to prevent these 60,000 felonies.
Note that the Guardian column (hilariously) describes Meddings as “polite.” The UK parliamentary report reported on the reality of banking in the City of London.
764. Dr Adam Posen argued that the culture of banks reflected the accumulated consequences of a wide range of economic incentives:
I tend to believe that a lot of what we call culture does respond—at least in commercial areas—to incentives. Part of the issue is that when capital is impeded at these banks, when these banks have compensation schemes that reward deal-making and international deal-making over high street lending, and when they have shortterm objectives and compensation schemes that emphasise short-term trading, those things produce a certain culture. The swaggering, macho, somewhat nasty fraudulent culture that emerges reinforces it.1273
The Guardian, though a paper of the left, is an English paper and its writers remain susceptible to what The Economist’s apt paraphrase of J.K. Galbraith’s vital warning: “There was the tendency, he wrote in 1961, to confuse good manners and good tailoring with integrity and intelligence.” The manners that are revealed under pressure – when a (relatively) honest U.S. counterpart blows up the massive criminal operation that Medding had so studiously ignored – are the manners that matter. Under pressure, Meddings immediately lost his superficial “polite[ness]” and reverted to the crudest of trader modes. But he probably still looked good doing it because of his tailor.