Wall Street
18 July 2012. Forbes reported that bankers and brokers who responded to a survey said that they have personally observed unethical practices at their institution, and believed that it was necessary to cheat or take illegal actions in order to succeed. One in three felt pressured by bonus or compensation plans to violate the law or to engage in unethical practices. Only one in four believed that their regulators are effective. Few people know that the Federal Reserve is owned by the banks that it regulates and that Jamie Dimon, chairman and CEO of JPMorgan Chase, is on the board of the New York Fed! Asked this morning about his knowledge of the LIBOR scandal as early as 2008, Treasury Secretary Timothy Geithner defended his actions and promised a thorough reform effort. Geithner’s actions notably included sending a 6-point memo to Mervyn King, Governor of the Bank of England, outlining a set of recommendations to “enhance the credibility” of the LIBOR rate-setting. The memo, which was published by the New York Times, recommends strengthening governance, specifying transaction size for rate quotes and eliminating the incentive to misreport. http://graphics8.nytimes.com/packages/pdf/business/Geithner-Memo-080601.pdf Geithner also briefed U.S. regulators in 2008, setting in motion what he called a “very powerful enforcement response.” Promising more to come, Geithner noted, “We’re going to make sure there’s a strong, credible reform effort. We need to demonstrate to the world that we’re going to have the best enforcement response.”
