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Wall Street Quite Frank About Culture of Corruption

By: Frank Armstrong

By: Frank Armstrong, III, CFP„¢, AIFA®

A shocking percentage of brokers and bankers that responded to a recent survey* either participate in unethical practices, have personally observed them at their institution, and/or believe it’s necessary to cheat or take illegal actions in order to succeed. An alarming number would commit a crime if they could get away with it.

Furthermore, one in three felt pressured by bonus or compensation plans to violate the law or to engage in unethical practices. Only one in four believes that their regulators are effective.

These are the same criminals in pinstripes that brought you the financial crisis of 2008 which nearly brought the world’s markets to total failure. These same crooks are arguing for increased self regulation and relief from the watered down provisions of Dodd-Frank. Yet they are already too big to fail, too big to manage, and too big to regulate.

Meanwhile, regulatory capture is almost complete. For instance, few people know that the Federal Reserve is owned by the banks that it regulates and that wonder child Jamie Dimon , chairman and CEO of JPMorgan Chase, is on the board of the New York Fed! Now I wonder just what kind of arms-length regulation we can expect when the foxes are guarding the hen house?

Is it any wonder that the banks skate by with inadequate capital reserves use your deposits to run a hedge fund, pay themselves fortunes whether things go to hell or not, and look to be bailed out when the chickens come home to roost? Do you really think they may not have manipulated LIBOR?

Willie Sutton robbed banks because that’s where the money was. By the way, during his whole career, he only robbed about $2 million. His grandson is the bank! And he’s robbing it on a scale that would have made old Willie proud.

At the University of Virginia we had a very simple honor code: A gentleman neither lies, cheats, nor steals, nor tolerates anyone that does. These guys are three times losers under that code. Do you really want them to continue business as usual on Wall Street? Do you want to support them?

If your stomach is strong enough, read the survey results. Then decide if you shouldn’t include some sort of ethical and moral screening to the institutions that invest your money.