Since the early days of civilisation, a city’s largest buildings have reflected what is most valued in a society. At one time, church spires towered over city centres, later giving way to magnificent government capitol domes.
Today, the offices of financial institutions dominate downtown skylines. Indeed, the American public values its banks and investors, but in return it expects they will represent and uphold its core values.
That trust has been damaged in recent years. Greg Smith’s resignation letter to Goldman Sachs a few weeks ago, in which he accuses the financial giant of putting profits ahead of the best interests of its clients, is the latest black eye for the industry. Regardless of the accuracy of Smith’s claims, they mirror the public sentiment and perceptions of the financial world since the economic crash of 2008.
And yet, for reasons that remain a mystery, the financial sector has mostly failed to address its negative public image in a way that would begin to repair its tattered reputation.
Wall Street ignores its branding at its own peril, as there is a common thread connecting Smith’s letter and the global growth of the Occupy movement. While most rational people don’t begrudge hard-earned success and wealth, there is an expectation that the powerful people on Wall Street will assume more responsibility than to simply ensure the highest earnings to shareholders.
Not only has the financial sector failed to address our loss of faith, but its leaders may not recognise just how important their firms are in our lives and in our sense of identity. The bailouts of Wall Street and the auto industry are proof of their unique status in our culture. Would there be frantic congressional action to ensure the stability of the footwear industry? Even the constitutionally protected newspaper business has shrivelled without any serious suggestion of taxpayer assistance.
Our society grants the financial sector special consideration and we expect an acknowledgement of this. So far, some bailed-out bankers have come across as smug and unapologetic. Perhaps they have learned from what has happened over the last four years, but they don’t seem to be trying very hard to convince us of that. Here are some suggestions for restoring our confidence:
• Those in the financial sector must acknowledge they’ve lost our trust because they were in large part responsible for creating the crisis. This requires more than simply producing a handful of television commercials telling investors, "You can trust us. We’re not like our greedy competitors.”
We need to see changes in bankers’ behaviour, not simply shifts in their public relations strategies. If perceived greed is to be addressed, forgoing bonuses on top of multi-million-dollar salaries would be a good start.
• They should also curtail their influence peddling in Washington, to ameliorate Americans’ widespread concern that the financial sector holds undue influence over our political and economic systems. Even more persuasive might be seeing financial sector leaders advocate for (rather than oppose) transparency and regulations that restrict practices that might be – fairly or unfairly – viewed as unethical, illegal or at least irresponsible.
• To be seen as trustees of a valued societal asset – our investments are essentially our hopes and dreams – they must sacrifice more than those not in the trustee position. Hunkering down and stonewalling simply will not address the underlying concerns that have bubbled to the surface in recent years.
The banking industry’s iconic status in our society affords its players special accommodations from the government and the public. But that unique position comes with strings attached, perhaps most significantly in the form of a responsibility to uphold our values – in other words, a responsibility to lead.
Sim Sitkin is professor of management and faculty director of The Fuqua/Coach K Center on Leadership and Ethics at Duke University’s Fuqua School of Business. Sanyin Siang is executive director and senior research associate of The Fuqua/Coach K Center.