Doing the right thing – A question of Ethics

I recently blogged on Finextra about Ethics and regulation in the financial world under the title “It is more about ethics than policing” (http://www.finextra.com/community/fullblog.aspx?id=3918 )

In this blog I wrote;

"So the FSA is going to beef up on its staff in the oversight of the banks. As I see it, this approached is doomed before it even starts. The regulator, whether it is the FSA or any other, cannot match both the expertise and the innovativeness of the staff in the banks. The reason for this is simple. The regulator cannot compete with the banks in terms of direct payments, like salaries, or other incentives like bonuses.


This gets the whole issue back to what got the financial industry into this mess in the first place.


Putting more overseers in to monitor what is going on is also of doubtful value. It is an approach that will only lead to lulling everybody back into a false sense of security (again). This will last only until the next crisis emerges.


The real solution lies with bank managements accepting, in all sincerity, that they do have a real obligation to abide by certain ethical standards (and bankers in their position of trust within the community should know all about this) and that profits are not the only game in town.


If they can't get this right then no amount of new rules or new inspectors are going to make any difference.”

Bryan Foss responded to my comments with the following;

“Absolutely agree - this issue is about ethics and no amount of expensive (funded by the consumer it aims to protect) regulation will be enough to counter the effects of boards with objectives that are misaligned from their stakeholders (whether customers, investors, employees, suppliers, partners or regulators).


As an NED I have a responsibility to represent all these stakeholders at different times and the ethical challenge makes sense on the board and in leading and being a member of the key assurance committees (Audit, Risk, Nominations and Remuneration for example).


There is some excellent work being done in this area, but so far with insufficient impact on the big banks, or even on the government or FSA as regulator. Too many 'same olds' are moved around or called back in so that things don't really change at all - just look at the FSA and UKFI, if you can find the key names or how the appointment process is supposedly 'transparent'.


One person who is starting to influence these boards and to shake things up with the various regulators (wider than the FSA) is Prof. Roger Steare, Corporate Philosopher with CASS (City University Business School).


There is much more to be done, but we may now be at, or very close to, the tipping point where ethics really count - and there are more than a few people ready to give a final push .......”

Roger Steare is the Corporate Philosopher (http://www.rogersteare.com/). He works with people in businesses all over the world who want to do the right thing. He helps them build trust and sustainability. This short video is like a breath of fresh air.

Bankers’ Bonuses in context

The UK economy is in a mess but the bankers that many hold responsible for this are still taking home jaw dropping bonuses. This illuminating graphic from Money.co.uk.

Click on the image below to enlarge.

Lehman Brothers kept billions off its books

It is the Wall Street equivalent of a coroner’s report — a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.

You can read the full article from the New York Times at http://www.nytimes.com/2010/03/12/business/12lehman.html?hp=&pagewanted=all

Asia's growing economic power

Asia is regaining the economic dominance it enjoyed a thousand years ago. However it still has some way to go. View this short video by the Economist.

CA Digest No. 191 10 March 2010

You can dowload the new CA DIGEST here. Click the link below and the "DOWNLOAD" button.

Citadel Advantage Ca Digest New 191 100310

View more documents from Stanley Epstein.

Short Selling or Shorting – Is it really a conspiracy?

Bloomberg's Sara Eisen reports on a February 8, 2010 secret dinner of hedge fund managers, at which the investors discussed big bets against the euro.

New association formed to simplify international credit transfers

A group of 21 banks, clearing houses and associated payment service providers have launched the International Payments Framework Association (IPFA).

The body says its main purpose is to provide business rules, standards and operating procedures to improve non-urgent cross border credit transfers based on the ISO 20022 message standard by establishing a contractual framework.

At its inaugural meeting in London the IPFA has elected a board of directors - consisting of representatives from six banking institutions and three clearing houses - for a three year term.

Arthur Cousins of Standard Bank of South Africa was elected chairman with Equens' Michael Steinbach named vice-chairman.

April 2010 will see the commencement of live traffic between two IPFA members when the The Federal Reserve Bank in Atlanta and Equens will start with exchanging both USD and EUR payments between the USA and Europe.

Meanwhile, several IPFA members have begun planning for the inclusion, into the framework, of the Brazilian, Canadian, Mexican and South African currencies over the next two years.

The full list of members is ABN Amro, Canadian Payments Association, CamaraInterbancariade Pagamentos(CIP), Clear2Pay, Equens, Eurogiro, Federal Reserve Bank, Fifth Third Bank, JP Morgan, Nacha, PayPro, PNC, SECB Swiss Euro Clearing Bank, Standard Bank of South Africa, Standard Chartered Bank, Swift, The Clearing House, US Bank, VocaLink, Wells Fargo/Wachovia, World Savings Banks Institute and ZionsBancorp.