Finance Needs Its Own Hippocratic Oath
While the future of financial regulation is unclear, the future of ethics in finance should not be. Instead of waiting for Washington or Basle to impose new capital rules or create new consumer protections, every professional involved in raising or investing capital should agree to comprehensive ethical guidelines, voluntarily taking our own Hippocratic oath. Doing so would reform the financial industry immediately, from within.
Many banking and asset management firms require their employees to abide by ethical codes or sign pledges of professional behavior. Chartered Financial Analysts and some MBA holders have gone a step further, vowing to root out conflicts of interest and promote value creation. These codes often fall short in two ways, however. First, they often omit “the golden rule,” requiring bankers to put others’ interests ahead of their own. Second and more critically, they apply to fewer than 1% of the 30 million men and women in the financial profession globally. Codes signed as a requirement of employment or to receive a degree are more a gesture or conveyance than a solemn vow, moreover. Given the cataclysmic, collective failure of our industry and the destruction of the general public’s trust, something more comprehensive and, frankly, penitential is needed.
Profound cynicism will greet any effort to change the banking industry from within. This is understandable; skepticism is a corollary of failure and the business of money has never cloaked itself in nobility. But cynics must also admit there is no way to build a more prosperous and just society without capital flowing freely from savers to its most productive uses. Winston Churchill’s famous defense of democracy – that it’s the worst form of government except for all the others –is equally true of capitalism. Competitive free markets with prudential regulation remain humanity’s best hope for eradicating suffering, advancing opportunity and promoting universal values, however imperfect they might be. Investment bankers, asset managers and all finance professionals have a vital role to play in channeling assets efficiently and fairly. To succeed in the broadest sense, we must go further still, embracing our collective responsibility to serve the greater good by maintaining unimpeachable ethics.
Human development, economic prosperity, social cohesion and individual happiness are not possible without bankers tuning their consciences to the societies in which they are privileged to operate. Those with personal wealth know too it alone does not lead to fulfillment; bankers will only know true happiness when they think and operate communally, like our best educators, civic servants and doctors. With the public’s growing trust would come greater professional esteem. As Vincent Van Gogh memorably said, “In the end we will all have had enough of cynicism and skepticism, and we shall want to live more musically.”
Today, cynicism and disillusionment about banking threaten to destroy our broader social contract and, by inference, human development. Improved, prudential regulation is certainly needed, but many of our most urgent reforms can only be met if members of the financial profession tether themselves to goals larger than their personal interests and desires. Reforming our industry from the inside out, and committing to higher standards of personal integrity, fairness, disclosure and discretion would also help heal the global economy and forestall the next crisis.
As it all lies within our own grasp, why wait?