What Has Not Changed

This chapter begins by explaining that financialization since the financial crisis has continued. The chapter then shows how the real culture of banking has not changed as a result. It examines the business models of the largest Anglo-American banks and the impact of Quantitative Easing to show the disconnect between the banks and their respective economies. It then examines rising household indebtedness, and the lending practices of the banks that exploit the heavily indebted. Finally it explores pay in the financial sector, showing that fixed and variable remuneration remain out of proportion to the value-added of the banking sector, and disproportionately high compared to pay in most other sectors. The conclusion we should draw is that bank culture has actually changed very little.

Fines as a Mechanism for Culture Change?

This chapter begins with the claims made by state managers that financial penalties would function as an important mechanism for improving conduct and culture in the banks. The main argument of this chapter is that this claim is spurious. The chapter shows that fines bear only a vague relationship to the financial performance of the firms in question. It then explores issues such as the tax deductability of the fines, and the finer details of the penalties themselves to argue that the penalties were primarily part of the populist strategy used by state managers.

UK Responses and the First Phase

This chapter covers the early 2000s in the UK as a backdrop to the legitimacy crisis that unfolded as the global financial crisis hit. It explains the institutional set-up and the regulatory mindset that prevailed during the 2000s. This helps to explain what changed as financial crisis hit. Using opinion poll data the chapter then explores the fall in public confidence in both banks and state managers as a means of tracking the legitimacy crisis. Then the chapter explores the austerity agenda and rising protests in the UK, before explaining the nascent populist response by UK state managers at the early stage of the financial crisis.

UK Responses and the Second Phase

This chapter focuses on the culture of banking debate that emerged following the LIBOR scandal in 2012 in the UK. It shows a range of the harder, institutional and regulatory measures and penalties that were introduced to remedy bank culture. The chapter then moves to discuss the softer, normative agenda that also focused on bank culture change. The chapter contends though, that in both cases state managers were as concerned about tackling the legitimacy crisis as they were about actually improving bank culture. The chapter also shows the glaring absence of a debate on the structural causes of banking culture.

US Responses and the First Phase

This chapter covers the early 2000s in the US and explains the backdrop to the legitimacy crisis that unfolded as the culture of banking crisis hit. It explains that following a regulatory tightening after the Enron scandal and the Dot.com boom, efforts diminished by the mid-2000s. Using opinion poll data the chapter then shows how public confidence in both the banks and the political classes fell dramatically as the financial crisis hit. It then explores the initial political responses to the financial crisis, arguing that though bank culture was identified as a problem as early as 2008–9, the initial responses focused only on tightening market discipline to reform conduct.

Bank Culture

This chapter expands on the two explanations for bank culture. Firstly, it explores the idea that culture is determined by financial and non-financial incentives, and values. Secondly, the chapter explores the financialization of Anglo-America. It argues that financialization stemmed from a crisis of accumulation in the post-war economy, but came to reshape a full range of financial and non-financial corporate activities. It explains though that financialization breeds instability and inequality, and that Anglo-American banks exploit and exacerbate these conditions. This is the argument that will be developed more fully in coming chapters, in order to understand the more significant determinants of ‘bad’ bank culture.

Introduction

This chapter introduces the bank culture debate that took place in the political realm. It then explains that the political debate was based on a very narrow reading of bank culture, which focused on improving market conduct via greater market discipline and ethical reforms. The idea was to make bankers behave better. The chapter argues however, that there are compelling structural pressures—under financialization—that determine bank culture in Anglo-America, but which were conspicuously absent from the political debate. The chapter explains why policymakers avoided the more challenging debate about bank culture.

Conclusion

This concluding chapter first reviews the main arguments of the book. It then examines what has happened in the political and financial spaces since the culture of banking debate became less of a priority in 2016. The chapter focuses on fintech, shadow banking, and high cost credit providers to show that the cultural problems associated with financialization continue to abound even outside of the banking sector. Finally, it turns to Brexit and Trump as evidence of the same anti-establishment sentiment that was tracked in the legitimacy crisis chapters. The book concludes with a word of warning that the legitimacy crisis has only been delayed.

US Responses and the Second Phase

This chapter argues that after the initial responses to the financial crisis the culture of banking debate came to the fore from 2012 onwards. Following government spending cuts and political protests the repeated banking scandals that emerged constituted a second wave. US state managers moved beyond improving market discipline to ethical reform and new institutions. But the chapter argues that the unfolding legitimacy crisis was perhaps the main reason for the political focus on bank culture, and fundamentally shaped the populist tactics used by US state managers. The chapter also shows the glaring absence of a debate on the structural causes of banking culture.

What Has Changed

This chapter shows the impact that the narrower bank culture debate has had on life in the banks of Anglo-America. Using interview material and a range of official reports the chapter shows changes to risk-taking, performance-monitoring, compliance, and pay. It shows that culture and values certainly became central features in the rhetoric of the banks. But tangible, conduct-related improvements were also evident. Risk-taking was moderated, even though this may have just been a temporary change. New compliance monitoring measures certainly made the work environment more challenging for employees, and promoted a more cautious culture.