Tuesday, October 21, 2014

New York Fed President Links Financial Stability To A Change In Wall Street Culture

The New York Fed supervises the Wall Street banks.  The President of the New York Fed sent a tough message to Wall Street.  He told them that they have not made the changes that are needed to prevent the next financial crisis.  In essence he told his audience that the goal of financial stability required a serious change in the Wall Street culture.  The banks need to show that they are capable of managing themselves, or there would be pressure to reduce their size and complexity.  He argued that cultural changes are needed to make that happen.  He then described some of the changes that are needed.  His speech provides one of the clearest descriptions of the cultural changes that are required, and what is needed to change the culture, that any Fed supervisor has ever made.  It should be required reading in business courses.

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