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Abstract

If you think culture is too squishy, please hear us out. In Part I of this Article, we set out what we mean by culture. In Part II, we explain why we are interested in culture and why it matters to us now. In Part III, we will survey the work of other public authorities in their efforts to address culture. In our view, these efforts fall into several categories along a spectrum from more advisory to more prescriptive. We do not endorse any particular method. All of these efforts are useful attempts to address a common problem: repeated ethical failures that undermine the trustworthiness of financial services. We hope this Part will direct interested academics to useful source material and demonstrate the value of the various different approaches. In Part IV, we will focus on what the Federal Reserve Bank of New York (the New York Fed) has done to address culture. These efforts fall on the advisory end of the spectrum of available tools covered in Part III. This reflects, in part, the New York Fed’s role within the Federal Reserve, the central bank of the United States. Finally, in Part V, we pose a few questions for further discussion in academic forums: 1. What are we missing about culture? 2. What else should we and our colleagues at the Federal Reserve Bank of New York do? 3. How do we know if there has been progress? This Article does not include the customary survey of scholarly literature; we leave that to the more academically focused. Our purpose is not to fill gaps in what theorists and researchers have written. In addition, we avoid stating how financial institutions have approached culture, except where their efforts are public or described by other public authorities. This approach avoids concerns about inadvertently disclosing any confidential supervisory information.

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