Root Cause of Rogue Culture in Banks

The Wall Street Journal reported recently that the US Fed in order to rein in high risk taking aggressive banks, which had to be bailed with tax payers money for their rogue deals which landed them in high losses, has advised banks that they need to get deep into the culture and behavior patterns of their employees in order to ensure there is no recurrence of high VAR outages. Actually this issue is not one which is restricted to banks and can be resolved by simply weeding out a few so called aberrant employees. Neither can it be rectified by trying to ingrain ethical behavior among employees of financial services sector nor trying to doing employing surveys for tracking rating ratio of happy employees to grumpy employees over time! Wells Fargo, arguably the best bank in US also does culture surveys among its employees.  

The issue of culture cannot be studied in isolation in banks only. The issue is a far more deep seated societal malaise. The high risk taking and aggressive streak runs much deeper through the veins and aortas of society in general. Hence the analysis is required to be done over the entire canvas of society.

Today the violence which is pervading society has the same root causes, whether it is the action of a few rogue traders in banks, or a disturbed adult on a shooting spree at malls, or terrorists holding to ransom dozens of innocent people, or even a naïve three year old shooting his parents with their gun. Though these action points may seem random, but there is a high correlation between them and a common pattern which can be traced to the development of a hyper competitive, acquisitive, materialistic, conditioned society. The greed and avarice neurosis is running through all walks of life. It stems from the so called rush for “higher, faster, bigger, richer, better” right from school to families, corporations, and nations.

Recently three of the top four banks in US reported weak earnings for Q4 of 2014. Overall the banks in the developed economies are still to recover fully form the disastrous meltdown of 2008. In fact, US and European banks paid $65 bn in penalties and fines to regulators in 2014, 40% higher than the previous year. Credit rater S&P had to pay almost $100 mn in penalties to regulators and $1.5 bn to the justice departments for inflated ratings.

It is so ludicrous to see regulators wanting banks to do culture, behavioral and psychological tests of their employees after several financial meltdowns mostly due the crony nexus between banks, credit raters, stock markets, money markets, regulators and corporates. Agreed there is a boom and bust cycle in the financial markets, but conducting micro level research on employees is strange to say the least. Most of the weapons of mass destruction of the financial system were designed by rocket scientists who sat in their ivory tower rooms in the same floor as their CEOs corner rooms. The complex math algorithmic models of the derivatives and mortgage backed securities were not understood by the CEOs of the banks or even by the credit raters and regulators. The blind faith of most of us in complex modeling even without understanding them is frightening. If these models were made with reasonable assumptions and stress tested for all possible scenarios then we would not have been in the soup we are in today. The VAR models had never built in the worst case scenario combinations properly nor even envisaged the bunching of events.   

Another frightening nexus has been created within the health care industry where there is deep connivance between pharmaceutical industry, doctors, hospitals, health insurance and the regulatory authorities. Profit is the key to all the developments in this network. Hence we humans are mere guinea pigs in their search for higher profits.  

Aggression, cheating, corruption and violence in society are a deep seated phenomenon since times immemorial. But with the proliferation of guns, science, technology, wealth, cars and mass production, social dimensions of meum and teum, endless gratification, instant karma, etc have taken up ugly contours. Often the so called advanced societies in the developed world are found to have deep neurosis, psychological disorders, and mental sickness. The number of  psychiatrists and psychoanalysts in the these societies is the highest per head. The very norms of sane societies have changed. There are deep, dark and crazy desires which can only be fulfilled by transgressing upon the happiness of others. There is no inner peace. Hence since the 60s and age of flower power there has been an yearning for yoga and Buddhism and other oriental practices  

The vicarious lifestyles prevalent in highly developed societies have resulted in mindless high energy lifestyles, technological progress, hyper competition, mass consumerism and mall cultures, infinite varieties of food, clothing, electronics, etc to provide pleasure to the jaded, blunted and desensitized senses and taste buds. All this has lead to the plundering of all natural resources, carbon emissions, and irreversible climate changes. All these anthropogenic acts have emanated from plastic culture we have embraced and spread all over the globe thanks to media and internet. Now virtually half of the world owns smart phones and have become digitized zombies. A surreal sick society is the hotbed which has bred the financial monsters of Wall Street.  

Indeed, there is an urgent need for a newgrammaroflife.blogspot.in, which provides solutions for the deep rooted malaise at the individual, society & economy levels which would eventually lead to a societal and climate collapse.