Although our Financial Services Industry (FSI) appears to be getting stronger and pulling out of the current financial crisis with improving compliance, capital, liquidity and risk controls, it still continues to "stub its toes" by doing dumb things (e.g., the "Whale"). What is the answer?
One answer might be a change in culture, like an emphasis on the "customer comes first" mentality. Before the enactment of Gramm-Leach Bliley (GLB) in November 1999, which permitted banks to fully enter the securities underwriting business, bank loan officers held their customers’ interests very high. Ten and 15 year term loans made bankers quasi partners in their customers’ business. As they wore their increasingly less restrictive investment banking hats, their partnership role became less obvious as risks in part shifted from years to months. This shift in culture may have been less obvious with our regional and community banks, some of which took less advantage of GLB "opportunities."
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