Wall Street Is Using the Power of Dodd-Frank Against Itself

Rent-seeking tends to be a force against innovation and for stagnancy, in large part because its focus is on the past — on maintaining power and influence gained long ago, often at the expense of innovation. Businesses built around rent-­seeking don’t try to increase the size of the pie; they just want to make sure they get a bigger slice. (If a company doesn’t seem to care about your opinion of it as a customer, there’s a good chance that it is seeking rents.)

.. The depth of the inquiry was notable because the school is generally thought of as a Wall Street-friendly training ground for future bankers. One of the most striking findings was that between 1980 and 2000, the large banks in America had significantly moved away from productivity ­enhancement and toward rent-­seeking.

.. To fight rent-­seeking, we would need banking laws made up of straightforward rules that educated laypeople could understand. They would have to eliminate our maddeningly complex regulatory infrastructure. There would be trade-offs: The financial system might not perform as efficiently, and the economy might not grow as quickly during boom times. But if done right, an overhaul of banking regulations could create a political context in which rent-­seeking self-­enrichment by banks is no longer the norm. We might even come to call it what it is: corruption.

Many on Wall Street Say It Remains Untamed

In the study, to be released Tuesday, about a third of the people who said they made more than $500,000 annually contend that they “have witnessed or have firsthand knowledge of wrongdoing in the workplace.”

Just as bad: “Nearly one in five respondents feel financial service professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment.”

..  Its results appear even more noteworthy today for the sheer number of individuals who continue to say the ethics of the industry remain unchanged since the crisis (a third said that, by the way).

.. Nearly one-third of those asked “believe compensation structures or bonus plans in place at their company could incentivize employees to compromise ethics or violate the law.”

.. On virtually every question, those in Britain seem to indicate that ethics problems could be even more widespread there. “Respondents from the U.K. are either more willing to commit a crime they could get away with — or are more frank about it,” the report’s authors write.

.. Many of those asked said they worried “their employer would likely retaliate if they reported wrongdoing in the workplace.”

And quite a few said that they had signed, or been asked to sign, a confidentiality agreement that would prohibit them from reporting illegal or unethical behavior to the authorities.

.. Better commenters than I will tell you that corporations feel no shame

 

Taking on the Banks: A Conversation with Anat Admati

Over the weekend, I had an e-mail conversation with Admati about the conference, which has another noteworthy feature: all of the presenters and moderators are going to be women. In addition to Warren, Yellen, and Lagarde, they include Esther George, the president of the Federal Reserve Bank of Kansas City; Brooksley Born, the former chair of the Commodity Futures Trading Commission; and Claudia Buch, the deputy president of the German Bundesbank. These days, of course, there are other high-level women’s conferences, including one organized by Fortune magazine and another by Tina Brown, the former editor of The New Yorker. But I can’t recall a major economics or finance conference in Washington or New York at which all of the presenters were women. (Of course, there have been plenty of conferences where all of the presenters were men.)

.. We avoided inviting people who work for private, for-profit financial institutions, whose interests are sometimes in direct conflict with those of the rest of society. My experience is that they often make vague, perfunctory, or, worse, misleading statements, which muddle the debate and waste valuable time.