Bank culture has featured prominently in the debate on financial reform. Culture, including values and beliefs, was at the center of the infamous “Muppets memo” penned by the resigning Goldman Sachs banker. Culture is the focus of the promises made by politicians and regulators to fix, once and for all, the City and Wall Street. And culture received a full chapter in the recent Salz Review of the problems at Barclays that led to the LIBOR scandal.

If one listens carefully, however, one can hear politicans doing the same verbal trick. Having denounced bank culture, they promise to remedy bank structure. E.g., separate (or, more creatively, “ring-fence“) investment and retail banking. Banish prop trading. And so on. This is not unreasonable, as the structure is really what regulators can intervene on. But years of organizational theory suggest that enduring change in organizations is impossible simply through formal measures — that is, in the absence of cultural change. As recent press reports have shown, cultural change is now very much taking place in seminars and value statement-writing sessions in the City. Canary Wharf appears to be teeming with PowerPoint-ready culture consultants.

Given this, I am organizing a panel discussion on bank culture (together with Nina Andreeva and Jean Pierre Zigrand). What are the promises of cultural reforms? What are the challenges? How does culture interact with structure? To this discussion, I invited a banker from Goldman, another from a top bank, a bank consultant in cultural change, and a prominent bank blogger from The Guardian. And I plan to combine them with regulators and academics: with Mike Power, an officer at the FCA, Nina Andreeva, and myself.

All in all, there will be two panels of four people. Each speaker will have about five minutes (vigorously enforced by the moderators). There will be 30 minutes of Q&A after each panel. And then drinks and nibbles. The event will take place at the spanking new LSE Systemic Risk Centre on November 21st from 4.00 onwards. It is free and open to the public, but registration is necessary. Please write to

LIMN is an experimental academic magazine created by Stephen Collier, Andrew Lakoff, and Christopher Kelty with the assistance of graphic designer Martin Hoyem.

Named after the decorated manuscripts of the Middle Ages, LIMN caters to both the academic affection for print and the need for lighter, faster publishing formats. The result is a promising alternative to institutionalized journals that combines concise 1000 word essays with visual support.

The first issue on the theme of ‘systemic risk’ is available through Amazon. The essays are already available online, but for anyone interested in the specific topic there is something appealing about the printed format.

There seems to be a tension between two of the key notions being bandied around in the crisis.

The notion of ‘moral hazard’ assumes that individuals acting as units will engage in activities (take on greater risk) because they know they are immune from the consequences of these actions (government bail out). Yet the notion of ‘systemic risk’ indicates that there are dynamics larger than individual units at play in the unfolding of events.

The most convincing indication of the tension comes, in how they encode different courses of action, in how they are counterposed as justifications for government intervention.  Creating moral hazard worsens the financial system, but stemming systemic risk is essential.

What is the big story here?  Is the ‘decade of moral hazard’ over as the Financial Times suggests (both in the sense that the Fed refused to bail out Lehman; and in the sense that the crisis might be seen as unraveling an accumulation of morally hazardous behavior)? Or is this about the rise of systemic risk that must be managed?…