The root of all evil
The big investment banks are sending out virtuous memos on working hours. Bank of America says junior employees need at least four weekend days off a month. Credit Suisse and Goldman Sachs are also worried about the bad effects of work weeks that often stretch to 100 hours. Such memos are better than nothing, but they cannot cure these institutions’ sick cultures.
To start, these labour-sparing efforts seem half-hearted. There are exceptions for “live deals” and no mentions of punishments for after-midnight workers or their bosses. And even if the suggestions were followed to the letter, they would leave young bankers working far longer than the 40-hour standard week mandated by U.S. law back in 1938.
But these institutions are not normal companies. They pay their workers much more, expect much more of them, and tend to forget that employees are supposed to serve clients, not take advantage of them.
The many allegations of unfair trading are a sign of the cultural problem. Libor fixing has been admitted. Employee suspensions suggest there was a real problem with the manipulation of foreign exchange rates. A Reuters report that the U.S. Federal Bureau of Investigation has evidence of front-running on interest-rate swaps fits with the pattern. Profit comes first on the trading floor. Risk management is second. Ethics are little more than a distant speck on the horizon.
The financial crisis should have exposed the dangers of institutional reliance on amoral ambition. Exorbitant rewards for economically dubious activities helped steer banks in the wrong direction. However, while industry leaders have admitted making some “mistakes”, they still don’t see fundamental flaws in the way their businesses operate. And regulators are clamping down on capital, but seem powerless to change the way banks look at the world.
The lack of a true cultural revolution is regrettable. Young people will end up working unnecessarily hard, despite the memos. And the economy will suffer from relying on financial institutions that can’t tell right from wrong.