Project and content management for Contemporary Authors volumes
WORK TITLE: Better Bankers, Better Banks
WORK NOTES: with Claire A. Hill
PSEUDONYM(S):
BIRTHDATE: 1961
WEBSITE:
CITY: Minneapolis
STATE: MN
COUNTRY:
NATIONALITY:
https://www.law.umn.edu/profiles/richard-w-painter * http://press.uchicago.edu/ucp/books/author/P/R/au21263469.html * https://en.wikipedia.org/wiki/Richard_Painter
RESEARCHER NOTES:
PERSONAL
Born October 3, 1961.
EDUCATION:Harvard University, B.A. (summa cum laude); Yale University, J.D.
ADDRESS
CAREER
Lawyer and educator. U.S. Court of Appeals for the Ninth Circuit, law clerk for Judge John T. Noonan Jr.; Sullivan & Cromwell, New York, NY, lawyer; Finn Dixon & Herling, Stamford, Connecticut, lawyer; University of Oregon School of Law, law faculty; University of Illinois College of Law, Champaign, IL, Guy Raymond and Mildred Van Voorhis Jones Professor of Law, 2002-05; chief White House ethics counsel for the George W. Bush Administration, 2005-07; University of Minnesota Law School, S. Walter Richey Professor of Corporate Law, 2007—.
MEMBER:American Law Institute, American Bar Association.
WRITINGS
Contributor of articles to professional journals, including Valparaiso University Law Review, Virginia Journal of Criminal Law, Minnesota Law Review, Wisconsin Law Review, American University Business Law Review, and Family Law Quarterly.
SIDELIGHTS
American lawyer Richard W. Painter is the S. Walter Richey Professor of Corporate Law at the University of Minnesota Law School. Previously, he was the Guy Raymond and Mildred Van Voorhis Jones Professor of Law at the University of Illinois College of Law in Champaign, Illinois. From 2005 to 2007, he served as the chief White House ethics counsel under the administration of George W. Bush. Painter holds a J.D. from Yale University, and his areas of expertise include banking law, government, ethics, and securities law.
In 2009, Painter published Getting the Government America Deserves: How Ethics Reform Can Make a Difference, in which he studies government ethics law from an academic perspective. According to Painter, the U.S. government has neglected dealing with systematic corruption and lapses in ethics that have seriously undermined its integrity. Painter identifies several areas in particular where substantial reform is needed, such as financial conflicts of interest, interactions with lobbyists, monitoring power factions within the government, and adherence to regulatory and reporting requirements. In order to effectively address shortcomings in these areas, Painter suggests strengthening the enforcement of ethics rules, reforming the lobbying industry, and changing campaign finance practices that can hamper ethics reform. Frank Anechiarico offered a critique of Painter’s thesis in a review in the Election Law Journal. “Painter’s analysis, considering the topic of national ethics reform, is narrow,” said Anechiarico. “The book misses many of the larger problems of government ethics, as well as the more evident Madisonian factors which underlie them.”
In 2015, Painter collaborated with Claire A. Hill to published Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment. Painter and Hill examine what should be considered acceptable and responsible risks in banks’ lending practices, based on history, social and economic contexts, and regulatory and legal constraints. They contend that a culture of bad behavior has evolved and become acceptable in the financial industry, beginning in the 1980s when banks moved from acting as partners with their customers to being large corporations with no liability when handling other people’s money. During that decade, banks’ focus became solely geared toward increasing corporate profits, often resulting in massive bonuses for banking executives. Even though banks have paid enormous fines for wrongdoing, the banking corporations, not the individual bankers, have paid up. There is thus no personal incentive for bankers to change their ways.
Painter and Hill state that in order to fix banking problems, bankers themselves need to become personally liable with their own assets for some of their company’s losses due to excessive risk-taking and arguably illegal financial practices. Painter and Hill propose that bankers should practice “covenant banking,” in which their own compensation goes up with good decisions and down with bad ones. In a review in USA Today, Glenn Harlan Reynolds echoed the authors’ stance, noting that in general “problems come from having people in charge who don’t feel the pain when their various schemes go bad.” Strongly recommending the book in a review in Choice, I. Walter stated that Painter and Hill “anchor their logic in the great traditions of business and banking partnerships and do indeed make a compelling argument.”
BIOCRIT
PERIODICALS
CHOICE: Current Reviews for Academic Libraries June, 2016. I Walter, review of Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, p. 1518.
Election Law Journal, fall 2009, Frank Anechiarico, Getting the Government America Deserves: How Ethics Reform Can Make a Difference, p. 383.
ONLINE
Huffington Post, http://www.huffingtonpost.com/ (May 20, 2017), profile of Richard W. Painter.
LSE Review of Books, http://blogs.lse.ac.uk (February 13, 2016), review of Better Bankers, Better Banks.
New York Times Book Review Online, https://www.nytimes.com (February 6, 2016), review of Better Bankers, Better Banks.
University of Chicago Press Web site, http://press.uchicago.edu/ (May 20, 2017), publisher’s information page for Better Bankers, Better Banks.
University of Minnesota Law School Web site, https://www.law.umn.edu/ (May 20, 2017), faculty profile.
USA Today, http://www.usatoday.com (October 29, 2015), review of Better Bankers, Better Banks.
Richard W. Painter is the S. Walter Richey Professor of Corporate Law at the University of Minnesota Law School. He is the author of several books, including, most recently, Getting the Government America Deserves and has served as Associate Counsel to the President in the White House Counsel’s office.
Affiliation: University of Minnesota
Hometown: Minneapolis, MN
Richard Painter
From Wikipedia, the free encyclopedia
Richard W. Painter is an American lawyer, and the S. Walter Richey Professor of Corporate Law at the University of Minnesota Twin Cities.[1] He was the chief White House ethics lawyer in the George W. Bush Administration.[2][3][4] He served in this capacity over a two-year-period — 2005-2007.[1]
Painter has a bachelor's degree in history from Harvard University and a JD from Yale University.[3]
Richard W. Painter
S. Walter Richey Professor of Corporate Law
Harvard University, B.A.
Yale Law School, J.D.
Office: 318
Mondale Hall, 229 19th Avenue South
Minneapolis, MN 55455
P: 612-626-9707
E: rpainter@umn.edu
Professor Richard W. Painter received his B.A., summa cum laude, in history from Harvard University and his J.D. from Yale University, where he was an editor of the Yale Journal on Regulation. Following law school, he clerked for Judge John T. Noonan Jr., of the United States Court of Appeals for the Ninth Circuit and later practiced at Sullivan & Cromwell in New York City and Finn Dixon & Herling in Stamford, Connecticut.
He has served as a tenured member of the law faculty at the University of Oregon School of Law and the University of Illinois College of Law, where he was the Guy Raymond and Mildred Van Voorhis Jones Professor of Law from 2002 to 2005.
From February 2005 to July 2007, he was Associate Counsel to the President in the White House Counsel’s office, serving as the chief ethics lawyer for the President, White House employees and senior nominees to Senate-confirmed positions in the Executive Branch. He is a member of the American Law Institute and is an advisor for the new ALI Principles of Government Ethics. He has also been active in the Professional Responsibility Section of the American Bar Association.
Professor Painter has also been active in law reform efforts aimed at deterring securities fraud and improving ethics of corporate managers and lawyers. A key provision of the Sarbanes-Oxley Act of 2002 requiring the SEC to issue rules of professional responsibility for securities lawyers was based on earlier proposals Professor Painter made in law review articles and to the ABA and the SEC. He has given dozens of lectures on the Sarbanes-Oxley Act to law schools, bar associations, and learned societies, such as the American Academy of Arts and Sciences. Professor Painter has on four separate occasions provided invited testimony before committees of the U.S. House of Representatives or the U.S. Senate on securities litigation and/or the role of attorneys in corporate governance.
His book, Getting the Government America Deserves: How Ethics Reform Can Make a Difference, was published by Oxford University Press in January 2009. He has written op-eds on government ethics for various publications including the New York Times, the Washington Post and the Los Angeles Times, and he has been interviewed several times on government ethics and corporate ethics by national news organizations, including appearances on Lawrence O’Donnell (MSNBC), Anderson Cooper 360 (CNN), CNN News, Fox News, National Public Radio All Things Considered, and Minnesota Public Radio News. In 2011, he testified before the U.S. House Government Oversight Committee on partisan political activity by government officials and reform of the Hatch Act. Professor Painter has also given expert testimony in cases involving securities transactions and the professional responsibility of lawyers. He testified as a defense witness in SEC. v. The Reserve Money Market Fund (SDNY, November 2012), a jury trial of an SEC enforcement action against the founders of the world’s oldest money market fund that ended with a defense verdict on all of the fraud counts.
Professor Painter is the author of two casebooks: Securities Litigation and Enforcement (with Margaret Sachs and Donna Nagy; West 2003; Second Edition, 2007; Third Edition 2011) and Professional and Personal Responsibilities of the Lawyer (with Judge John T. Noonan Jr.; Foundation 1997; Second Edition, 2001; Third Edition 2011). He has written dozens of articles, book reviews, and essays, including a series of papers and a forthcoming book with Minnesota colleague Claire Hill on the personal responsibility of investment bankers.
During the 2014-15 academic year, Professor Painter will be on leave as a fellow at Harvard University’s Safra Center for Ethics where he will work on a book on campaign finance reform.
For further information on Professor Painter, please see his PDF iconcurriculum vitae.
Federal Securities Regulation
Spring 2018
Spring 2017
Spring 2016
Securities Litigation
Spring 2018
Spring 2017
Spring 2016
Professional Responsibility - Business
Fall 2017
Fall 2016
Professional Responsibility - Government
Fall 2017
Fall 2016
Books
Taxation Only With Representation (Take Back Our Republic, 2016)
Amazon | MNCAT
Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment (University of Chicago Press, 2015) with Claire Hill
Amazon | MNCAT
| SSRN
Securities Litigation and Enforcement: Cases and Materials (Thomson/West, 1st ed., 2003; 2d ed., 2008, 3d ed., 2012) (Teacher’s Manual, 2003, 2008 & 2012) with Donna Nagy & Margaret Sachs
Amazon | MNCAT
Professional and Personal Responsibilities of the Lawyer (Foundation Press, 1st ed., 1997; 2d ed., 2001; 3d ed., 2011) with John T. Noonan Jr.
Amazon | MNCAT
Getting the Government America Deserves: How Ethics Reform Can Make a Difference (Oxford University Press, 2009)
Amazon | MNCAT
| SSRN
Book Chapters
Why Don’t Investment Bankers Think and Talk About Religion?, in 2013 Henry Kaufman Forum on Religion and Business (David Sicilia, ed., forthcoming)
Video
Christian Kirchner’s New Institutional Economics and Jurisdictional Competition in Regulation of Public Companies and Financial Services Firms, in Festschrift zu Ehren von Christian Kirchner: Recht im okonomischen Kontext (Wulf Alexander Kaal, Matthias Schmidt, Andreas Schwartze, eds., Mohr Siebeck, 2014)
Transaction Cost Engineers, Loophole Engineers or Gatekeepers: The Role of Business Lawyers After the Financial Meltdown, in Research Handbook on the Economics of Corporate Law (Claire A. Hill & Brett H. McDonnell, eds., Edward Elgar, 2012)
The Dubious History and Psychology of Clubs as Self-Regulatory Organizations, in Restoring Trust in America’s Business 127 (Jay W. Lorsch, Leslie Berkowitz & Andy Zelleke, eds., MIT Press, 2005) (American Academy of Arts and Sciences Corporate Responsibility Project symposium)
Journal Articles
People Who Are Not Legal and Who Are Not Alive in the Eyes of the Law, 59 Villanova Law Review 667 (2014) (Symposium in Honor of Judge John T. Noonan, Jr.)
HeinOnline: UMN, Others | Open Access | Open Access | Westlaw
Plugging Leaks and Lowering Levees in the Federal Government: Practical Solutions for Securities Trading Based on Political Intelligence, 2014 University of Illinois Law Review 1521 (2014) with Donna M. Nagy
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Numerical Half Truths, Human Lies, and Other Distortions of Truth, 47 Valparaiso University Law Review 479 (2013)
HeinOnline: UMN, Others | Open Access | Westlaw
Sworn to Fun, Loyal to None: Time Inconsistent Preferences in Investment Banking, 1 Virginia Journal of Criminal Law 334 (2013)
HeinOnline: UMN, Others | Westlaw
Selective Disclosure by Federal Officials and the Case for an FGD (Fairer Government Disclosure) Regime, 2012 Wisconsin Law Review 1285 (2012) with Donna Nagy
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Forum Competition and Choice of Law Competition in Securities Law After Morrison v. National Australia Bank, 97 Minnesota Law Review 132 (2012) with Wulf A. Kaal
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Of the Conditional Fee as a Response to Lawyers, Bankers and Loopholes, 1 American University Business Law Review 42 (2011-2012) with Claire Hill
HeinOnline: UMN, Others | Open Access | Westlaw
“Extraordinary Circumstances”: The Legacy of the Gang of 14 and a Proposal for Judicial Nominations Reform, 46 University of Richmond Law Review 969 (2012) with Michael J. Gerhardt
HeinOnline: UMN, Others | Open Access | Westlaw
Compromised Fiduciaries: Conflicts of Interest in Government and Business, 95 Minnesota Law Review 1637 (2011) with Claire Hill
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Pro Se Litigation in Times of Financial Hardship—A Legal Crisis and Its Solutions, 45 Family Law Quarterly 45 (2011)
HeinOnline: UMN, Others | Westlaw
| SSRN
The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche, 8 European Company and Financial Law Review 77 (2011) with Wulf A. Kaal
SSRN
The Dodd-Frank Extraterritorial Jurisdiction Provision: Was It Effective, Needed or Sufficient?, 1 Harvard Business Law Review 195 (2011)
SSRN
When Courts and Congress Don’t Say What They Mean: Initial Reactions to Morrison v. National Australia Bank and to the Extraterritorial Jurisdiction Provisions of the Dodd-Frank Act, 20 Minnesota Journal of International Law 1 (Winter 2011) with Douglas Dunham & Ellen Quackenbos
HeinOnline: UMN, Others | Westlaw
| SSRN
Berle’s Vision Beyond Shareholder Interests: Why Investment Bankers Should Have (Some) Personal Liability, 33 Seattle University Law Review 1173-1199 (2010) with Claire Hill
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Extraterritorial Application of US Securities Laws, 7 European Company Law 90 (2010) with Wulf A. Kaal
HeinOnline: UMN, Others
Initial Reflections on an Evolving Standard: Constraints on Risk Taking by Directors and Officers in Germany and the United States, 40 Seton Hall Law Review 1433 (2010) with Wulf A. Kaal
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
President Obama’s Progress in Government Ethics, 26 Constitutional Commentary 195-213 (2010)
HeinOnline: UMN, Others | Westlaw
The Moral Responsibilities of Investment Bankers, 8 University of Saint Thomas Law Journal 5 (2010)
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Bailouts: An Essay on Conflicts of Interest and Ethics When Government Pays the Tab, 41 McGeorge Law Review 131-160 (2009)
HeinOnline: UMN, Others | Open Access | Westlaw
| SSRN
Ethics in the Age of Un-incorporation: A Return to Ambiguity of Pre-incorporation or an Opportunity to Contract for Clarity?, 2005 Illinois Law Review 49-64 (2005) (Symposium on Un-incorporation), reprinted in Private Company Law Reform: International and European Perspectives (Joseph A. McCahery, Levinus Timmerman & Erik P.M. Vermeulen, eds., Asser Press, 2010)
HeinOnline: UMN, Others | Open Access | Westlaw
Free the Lawyers: A Modest Proposal to Allow Restrictions on Future Law Practice in Settlement Agreements, 18 Georgetown Journal of Legal Ethics 291-323 (2005) with Stephen Gillers
HeinOnline: UMN, Others | Westlaw
Regulatory Competition in EU Corporate Law after Inspire Art: Unbundling Delaware’s Product for Europe, 2 European Company & Financial Law Review 159-206 (2005) with Christian Kirchner & Wulf Kaal
HeinOnline: UMN, Others
| SSRN
Convergence and Competition in Rules Governing Lawyers and Auditors, 29 Journal of Corporation Law 397-426 (2004) (Symposium on Evaluation and Response to Risk in Law and Accounting in the U.S. and E.U.)
HeinOnline: UMN, Others | Westlaw
Standing Up to Wall Street (and Congress), 101 Michigan Law Review 1512-1531 (2003) (reviewing Arthur Levitt, Take on the Street: What Wall Street and Corporate America Don’t Want You to Know, What Can You Can Do to Fight Back (Pantheon Books, 2002)) (review essay)
HeinOnline: UMN, Others | Westlaw
Commentary on Brudney and Ferrell, 69 University of Chicago Law Review 1219-1229 (2002) (commenting on article by Victor Brudney and Allen Ferrell on corporate charity)
HeinOnline: UMN, Others | Westlaw
Takeover Defenses Under Delaware Law, the Proposed Thirteenth EU Directive and the New German Takeover Law: Comparison and Recommendations for Reform, 50 American Journal of Comparative Law 201-226 (2002) with Christian Kirchner
HeinOnline: UMN, Others | Westlaw
| SSRN
Afterword: Jurisdictional Competition as Federalism’s Answer to the Multidisciplinary Practice Debate, 36 Wake Forest Law Review 185-191 (2001) (Symposium on Multidisciplinary Practice)
HeinOnline: UMN, Others | Westlaw
Contracting Around Conflicts in a Family Business: Louis Brandeis and the Warren Trust, 8 University of Chicago Law School Roundtable 353-379 (2001)
HeinOnline: UMN, Others | Westlaw
Rules Lawyers Play By, 76 New York University Law Review 665-749 (2001)
HeinOnline: UMN, Others | Westlaw
A European Modified Business Judgment Rule for Takeover Law, 2 European Business Organization Law Review 353-400 (2000) with Christian Kirchner
SSRN
Advance Waiver of Conflicts, 13 Georgetown Journal of Legal Ethics 289-329 (2000) (Symposium on the Ethics of Business Lawyering)
HeinOnline: UMN, Others | Westlaw
Irrationality and Cognitive Bias at a Closing in Arthur Solmssen’s The Comfort Letter, 69 Fordham Law Review 1111 (2000) (Annual Ethics Symposium), reprinted in 34 Securities Law Review 285-311 (2002)
HeinOnline: UMN, Others | Open Access | Westlaw
Lawyers’ Rules, Auditors’ Rules and the Psychology of Concealment, 84 Minnesota Law Review 1399-1437 (2000) (Symposium on Multidisciplinary Practice)
HeinOnline: UMN, Others | Westlaw
Insider Trading and the Stock Market Thirty Years Later, 50 Case Western Reserve Law Review 305-311 (1999) (Symposium on the Legacy of Henry Manne) (response to essay by Professor Jon Macey)
HeinOnline: UMN, Others | Westlaw
Open Chambers?, 97 Michigan Law Review 1430-1471 (1999) (reviewing Edward Lazarus, Closed Chambers: The First Eyewitness Account of the Epic Struggles Inside the Supreme Court (Times Books/Random House, 1998)) (review essay)
HeinOnline: UMN, Others | Westlaw
Professional Responsibility Rules as Implied Contract Terms, 34 Georgia Law Review 953-971 (1999) (Symposium on Business Law)
HeinOnline: UMN, Others | Westlaw
Don’t Ask, Just Tell: Insider Trading after United States v. O’Hagan, 84 Virginia Law Review 153-229 (1998) with Kimberly Krawiec & Cynthia Williams
HeinOnline: UMN, Others | Westlaw
Responding to a False Alarm: Federal Preemption of State Securities Fraud Causes of Action, 84 Cornell Law Review 1-108 (1998)
HeinOnline: UMN, Others | Open Access | Westlaw
Second Opinions in Litigation, 84 Virginia Law Review 1411-1437 (1998) (Olin Foundation Symposium on Law and Economics of Lawyering) with Michael Klausner & Geoffrey Miller
HeinOnline: UMN, Others | Westlaw
Disclosure of Environmental Legal Proceedings Under the Securities Laws: A Potential Step Backward, 11 Journal of Environmental Law and Litigation 91-117 (1996) (Symposium on Business and the Environment)
HeinOnline: UMN, Others | Westlaw
Game Theoretic and Contractarian Paradigms in the Uneasy Relationship Between Regulators and Regulatory Lawyers, 65 Fordham Law Review 149-200 (1996) (AALS Professional Responsibility Section Symposium, AALS Annual Meeting, San Antonio, Texas (Jan. 1996)) (see Ian Ayres, Response to Painter, 65 Fordham Law Review 201-208 (1996))
HeinOnline: UMN, Others | Westlaw
Lawyer Disclosure of Corporate Fraud: Establishing a Firm Foundation, 50 SMU Law Review 101-157 (1996) (Symposium on Securities Regulation) (presented at the Meeting of the American Law and Economics Association, University of Chicago (May 1996)) (proposing at pages 261-263 legislative provisions resembling Section 307 of the Sarbanes-Oxley Act of 2002) with Jennifer Duggan
HeinOnline: UMN, Others | Westlaw
Contractarian and Cultural Perspectives on Value Creation by Business Lawyers, 74 Oregon Law Review 327-339 (1995) (comment on papers presented at Symposium on Business Lawyering and Value Creation for Clients (Nov. 1994))
HeinOnline: UMN, Others | Westlaw
Litigating on a Contingency: A Monopoly of Champions or a Market for Champerty?, 71 Chicago-Kent Law Review 625-697 (1995) (Symposium on Fee Shifting)
HeinOnline: UMN, Others | Westlaw
Toward A Market for Lawyer Disclosure Services: In Search of Optimal Whistleblowing Rules, 63 George Washington Law Review 221-296 (1995)
HeinOnline: UMN, Others | Westlaw
The Moral Interdependence of Corporate Lawyers and Their Clients, 67 Southern California Law Review 507-584 (1994), reprinted in 36 Corporate Practice Commentator 755-834 (1995)
HeinOnline: UMN, Others | Westlaw
Documents and Reports
Discipline of Law Firms (Report of the Committee on Professional Responsibility), 48 Record of the Association of the Bar of the City of New York 628-644 (1993), reprinted in Conference on Lawyer and Accountant Liability and Responsibility 5 (American Law Institute-American Bar Association Committee on Continuing Professional Education, 1993) (New York in 1996 became the first state in the United States to provide for discipline of law firms when the Appellate Division adopted rules essentially identical to several of the rules suggested in this Report) with Karen Burrows
HeinOnline: UMN, Others
The Attorney’s Duties to Report the Misconduct of Other Attorneys and to Report Fraud on a Tribunal (Report of the Committee on Professional Responsibility) 47 The Record of the Association of the Bar of the City of New York 905-927 (1992) with Sandra Nickel
HeinOnline: UMN, Others
Editorials, Commentary & Letters
Trump’s Unprecedented War on Ethics, USA Today, Mar. 20, 2017 (op-ed) with Norman L. Eisen
Open Access
Jeff Sessions Needs to Go, New York Times, Mar. 2, 2017 (op-ed)
Open Access
The Lesson of Nordstrom: Do Business With the Trumps or Else, New York Times, Feb. 9, 2017 (op-ed)
Open Access
Who Hasn’t Trump Banned? People From Places Where He’s Done Business, New York Times, Jan. 29, 2017 (op-ed) with Norman L. Eisen
Open Access
Trump’s Business ‘Separation’ Plan Does Nothing of the Kind, New York Times, Jan. 12, 2017 (op-ed)
Open Access
Can Donald Trump Hire Ivanka Trump?, New York Times, Dec. 29, 2016 (op-ed) with Norman Eisen
Open Access
Trump’s Business Empire Isn’t Just an Ethical Disaster, New York Times, Dec. 1, 2016 (op-ed)
Open Access
Trump’s “Blind Trust” Is neither Blind nor Trustworthy, Washington Post, Nov. 15, 2016 (op-ed) with Norman Eisen
Open Access
On Clinton Emails, Did the F.B.I. Director Abuse His Power?, New York Times, Oct. 30, 2016 (op-ed)
Open Access
The White House Rule: No Tax Returns, No Job, New York Times, Oct. 6, 2016 (op-ed) with Norman Eisen
Open Access
A Trump Presidency Would Be Ethically Compromised, Washington Post, Sept. 20, 2016 (op-ed) with Norman Eisen
Open Access
The Real Clinton Foundation Revelation, New York Times, Aug. 31, 2016 (op-ed)
Open Access
Bush Would Have Nominated Garland, New York Times, Mar. 23, 2016 (op-ed)
Open Access
The Conservative Case for Campaign-Finance Reform, Washington Post, Feb. 3, 2016 (op-ed)
Open Access
The NRA Protection Racket, New York Times, Dec. 19, 2012 (op-ed) (discussed in televised interviews with CNN Anderson Cooper, MSNBC Lawrence O’Donnell and others)
Open Access
Why S.E.C. Settlements Should Hold Senior Executives Liable, New York Times, Dealbook, May 29, 2012 with Claire Hill
Open Access
Invitation to a Dialogue: A Filibuster Alternative, New York Times, Feb. 29, 2012 and Mar. 4, 2012 (letter and reply to readers’ responses in the Sunday Dialogue section of the op-ed page) with Michael Gerhardt
Give All Judicial Nominees a Vote, Star-Telgram, May 30, 2011 (op-ed) (urging an end to Senate filibusters of judicial nominees)
The Case for Goodwin Liu, Politico, May 18, 2011 (op-ed)
Open Access
Marriage Amendment? Leave Marriage Well Enough Alone, Star Tribune, May 8, 2011 (op-ed) (opposing proposed amendment to the Minnesota Constitution)
The Separation of Politics and State, New York Times, June 14, 2010, at 23 (op-ed) (urging curtailment of White House political operations)
Tell Me No Lies: Don’t Ask Don’t Tell Institutionalizes Dishonesty in the Military, American Lawyer, June 1, 2010
Topic A: Politics as Usual, Washington Post, June 6, 2010 (op-ed) (discussing White House job offers to Senate candidates in Pennsylvania and Colorado)
Court Nominee Liu Follows the Law, Los Angeles Times, May 3, 2010 (op-ed supporting the President’s nomination of Goodwin Liu to the Ninth Circuit)
Mutual Funds: Fair Disclosure, Fair Regulation, New York Law Journal, Dec. 18, 2003, at 2 (op-ed) (urging sensible regulation of mutual funds)
Lawyer-Client Confidentiality: Changing Model Rule 1.6 is Long Overdue, California Bar Journal, Aug. 2003, at 1
Open Access
Congress Tells Corporate Lawyers to Tell Directors About Fraud, The Wall Street Lawyer, Aug. 2002, at 6 (discussing Section 307 of the Sarbanes-Oxley Act of 2002)
Our Security Markets Should Be Secure, Washington Post, Sept. 25, 2001, at A23 (proposing alternative trading floors and other measures to protect stock exchanges from terrorist attack)
Don’t Disadvantage Europe: The European Parliament Made the Right Call in Rejecting the Strict Neutrality Rule, Wall Street Journal Europe, July 19, 2001, at 9 (op-ed) (criticizing proposed EU corporate takeover directive that was rejected by the EU Parliament)
A Law Clerk Betrays the Supreme Court, Wall Street Journal, Apr. 13, 1998, at A23 (op-ed) (critical of former Supreme Court clerk’s use of confidential materials to write a book on the Court)
If This Is Mail Fraud, Then Most Lawyers Are Guilty, Wall Street Journal, May 4, 1994, at A15 (op-ed) (cited in the Wall Street Journal’s lead editorial of June 23, 1994) (critical of mail fraud conviction in United States v. Armand D’Amato (E.D.N.Y 1993), rev’d 39 F.3d 1249 (2d Cir. 1994))
Other Publications
DOJ’s Ex-Detainee Lawyers: The Ethics Issue, 11:3 Engage: The Journal of the Federalist Society’s Practice Groups 104 (Dec. 2010) with Edwin D. Williamson
Open Access
Government Ethics in President Obama’s First Year: A Preliminary Assessment, 10:3 Engage: The Journal of the Federalist Society’s Practice Groups 104 (Nov. 2009)
Open Access
Ethics and Corruption in Business and Government: Lessons from the South Sea Bubble and the Bank of the United States (University of Chicago Law School, 2006) (2006 Maurice and Muriel Fulton Lecture in Legal History)
SSRN
The Impact of Recent Developments in Securities Law and Ethics Rules on Tax Lawyers and Tax Directors, 83 Taxes: The Tax Magazine 81 (Mar. 2005) (University of Chicago Tax Conference)
HeinOnline: UMN, Others
Roundtable Discussion: Corporate Governance, 77 Chicago-Kent Law Review 235 (2001) (participant) (Theory Informs Business Practice Symposium) with William J. Carney, Jack B. Jacobs, Robert Pritzker & Robert H. Sitkoff
HeinOnline: UMN, Others | Westlaw
| SSRN
New Insider Trading Rules Attempt to Clarify SEC’s Approach, 15 Corporate Counsel Weekly 42 (2000) with Kimberly Krawiec
The New American Rule: A First Amendment to the Client’s Bill of Rights, 2000 Civil Justice Report 1 (2000)
SEC Discipline of Lawyers: In Search of a Firm Foundation, 1997 Professional Lawyer Symposium Issue 97-105 (1997) with Jennifer Duggan
HeinOnline: UMN, Others
Selected Legal Briefs
Brief of Amici Curiae Law Professors and Counsel in Support of Respondent, U.S. v. James Herman O’Hagan, 117 S. Ct. 2199 (1997) with Kimberly Krawiec & Cynthia Williams
Westlaw
Testimony
Is the Obama Administration Conducting a Serious Investigation of IRS Targeting?: Hearing Before the Subcommittee on Economic Growth, Job Creation and Regulatory Affairs of the House Committee on Oversight and Government Reform, 113th Cong., 2nd Sess. (Feb. 26, 2014)
Examining the Settlement Practices of U.S. Financial Regulators: Hearing Before the House Committee on Financial Services, 112th Cong., 2nd Sess. (May 17, 2012)
The Hatch Act: The Challenges of Separating Politics from Policy: Hearing Before the House Committee on Government Oversight and Reform, 112th Cong., 1st Sess. (June 21, 2011)
The Role of Attorneys in Corporate Governance: Hearing Before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the House Committee on Finance, 108th Cong., 2nd Sess. (Feb. 4, 2004)
Proposal to Amend the Model Rules to Provide for Advance Consent to Conflicts: Hearing Before the American Bar Association, Center for Professional Responsibility, Ethics 2000 Commission (June 4, 1999), reprinted in 10 Professional Lawyer 26 (Winter 1999)
HeinOnline: UMN, Others
Proposal to Amend Model Rule 1.13: Organization as Client: Hearing Before the American Bar Association, Center for Professional Responsibility, Ethics 2000 Commission (May 29, 1998), reprinted in 9 Professional Lawyer 10 (Spring 1998) (rejected by the ABA but later incorporated in substantial part into Section 307 of the Sarbanes-Oxley Act of 2002)
HeinOnline: UMN, Others
Securities Litigation Uniform Standards Act of 1997: Hearing Before the Subcommittee on Finance and Hazardous Materials of the House Committee on Commerce, 105th Cong., 2nd Sess. (May 19, 1998)
Securities Litigation Uniform Standards Act of 1997: S. 1260: Hearings Before the Subcommittee on Securities of the Senate Committee on Banking, Housing, and Urban Affairs, 105th Cong., 2nd Sess. (Feb. 23, 1998)
CV: https://www.law.umn.edu/sites/law.umn.edu/files/profile/rpainter/Painter.CV-May2014.pdf
Prof. Richard W. Painter
S. Walter Richey Professor of Corporate Law, University of Minnesota Law School
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Professor Richard W. Painter received his B.A., summa cum laude, in history from Harvard University and his J.D. from Yale University, where he was an editor of the Yale Journal on Regulation. Following law school, he clerked for Judge John T. Noonan Jr., of the United States Court of Appeals for the Ninth Circuit and later practiced at Sullivan & Cromwell in New York City and Finn Dixon & Herling in Stamford, Connecticut.
He has served as a tenured member of the law faculty at the University of Oregon School of Law and the University of Illinois College of Law, where he was the Guy Raymond and Mildred Van Voorhis Jones Professor of Law from 2002 to 2005.
From February 2005 to July 2007, he was Associate Counsel to the President in the White House Counsel's office, serving as the chief ethics lawyer for the President, White House employees and senior nominees to Senate-confirmed positions in the Executive Branch. He is a member of the American Law Institute and is an advisor for the new ALI Principles of Government Ethics. He has also been active in the Professional Responsibility Section of the American Bar Association.
Professor Painter has also been active in law reform efforts aimed at deterring securities fraud and improving ethics of corporate managers and lawyers. A key provision of the Sarbanes-Oxley Act of 2002 requiring the SEC to issue rules of professional responsibility for securities lawyers was based on earlier proposals Professor Painter made in law review articles and to the ABA and the SEC. He has given dozens of lectures on the Sarbanes-Oxley Act to law schools, bar associations, and learned societies, such as the American Academy of Arts and Sciences. Professor Painter has on four separate occasions provided invited testimony before committees of the U.S. House of Representatives or the U.S. Senate on securities litigation and/or the role of attorneys in corporate governance.
His book, Getting the Government America Deserves: How Ethics Reform Can Make a Difference, was published by Oxford University Press in January 2009. He has written op-eds on government ethics for various publications including the New York Times, the Washington Post and the Los Angeles Times, and he has been interviewed several times on government ethics and corporate ethics by national news organizations, including appearances on Lawrence O'Donnell (MSNBC), Anderson Cooper 360 (CNN), CNN News, Fox News, National Public Radio All Things Considered, and Minnesota Public Radio News. In 2011, he testified before the U.S. House Government Oversight Committee on partisan political activity by government officials and reform of the Hatch Act. Professor Painter has also given expert testimony in cases involving securities transactions and the professional responsibility of lawyers. He testified as a defense witness in SEC. v. The Reserve Money Market Fund (SDNY, November 2012), a jury trial of an SEC enforcement action against the founders of the world's oldest money market fund that ended with a defense verdict on all of the fraud counts.
Professor Painter is the author of two casebooks: Securities Litigation and Enforcement (with Margaret Sachs and Donna Nagy; West 2003; Second Edition, 2007; Third Edition 2011) and Professional and Personal Responsibilities of the Lawyer (with Judge John T. Noonan Jr.; Foundation 1997; Second Edition, 2001; Third Edition 2011). He has written dozens of articles, book reviews, and essays, including a series of papers and a forthcoming book with Minnesota colleague Claire Hill on the personal responsibility of investment bankers.
Education
Harvard University, B.A.
Yale Law School, J.D.
The Federalist Society takes no position on particular legal or public policy issues. The people listed as Experts have spoken or otherwise participated in Federalist Society events, publications, or multimedia presentations. A person's appearance on this list does not imply any other endorsement or relationship between the person and the Federalist Society. All expressions of opinion by an expert are those of the expert.
Publications and Multimedia
Presidential Conflicts? - Podcast
Practice Group Podcast
December 12, 2016
Sanctioning (Government) Lawyers - Podcast
Litigation and Professional Responsibilities & Legal Education Practice Group Podcast
August 30, 2016
Chadbourne & Parke LLP v. Troice - Post-Decision SCOTUScast
SCOTUScast 4-4-14 featuring Richard Painter
April 04, 2014
Chadbourne & Parke LLP v. Troice - Post-Argument SCOTUScast
SCOTUScast 10-15-13 featuring Richard Painter
October 15, 2013
DOJ's Ex-Detainee Lawyers: The Ethics Issue
Engage Volume 11, Issue 3, December 2010
December 23, 2010
Government Ethics in President Obama's First Year: A Preliminary Assessment
November 16, 2009
Scheme Liability under Section 10(b) - Event Video
Scheme Liability, Section 10(b), and Stoneridge Investment Partners v. Scientific Atlanta
October 05, 2007
Federalism and the Regulation of Attorneys - Transcript
November 15, 2003
6th Annual Corporate Governance Conference: Securities Markets After Global Crossing and Enron
October 01, 2002
Private Securities Litigation Reform Act: A Post-Enron Analysis
May 16, 2002
When Free Speech and Ethical Standards Collide - Transcript
November 15, 2001
Richard Painter Former Bush White House Chief Ethics lawyer
Professor Richard W. Painter received his B.A., summa cum laude, in history from Harvard University and his J.D. from Yale University, where he was an editor of the Yale Journal on Regulation. Following law school, he clerked for Judge John T. Noonan Jr., of the United States Court of Appeals for the Ninth Circuit and later practiced at Sullivan & Cromwell in New York City and Finn Dixon & Herling in Stamford, Connecticut.
He has served as a tenured member of the law faculty at the University of Oregon School of Law and the University of Illinois College of Law, where he was the Guy Raymond and Mildred Van Voorhis Jones Professor of Law from 2002 to 2005.
From February 2005 to July 2007, he was Associate Counsel to the President in the White House Counsel's office, serving as the chief ethics lawyer for the President, White House employees and senior nominees to Senate-confirmed positions in the Executive Branch. He is a member of the American Law Institute and is an advisor for the new ALI Principles of Government Ethics. He has also been active in the Professional Responsibility Section of the American Bar Association.
Professor Painter has also been active in law reform efforts aimed at deterring securities fraud and improving ethics of corporate managers and lawyers. A key provision of the Sarbanes-Oxley Act of 2002, sponsored by Senator John Edwards, requiring the SEC to issue rules of professional responsibility for securities lawyers, was based on earlier proposals Professor Painter made in law review articles and to the ABA and the SEC. He has given dozens of lectures on the Sarbanes-Oxley Act to law schools, bar associations, and learned societies, such as the American Academy of Arts and Sciences. Professor Painter has provided invited testimony before committees of the U.S. House of Representatives and the U.S. Senate on private securities litigation and the role of attorneys in corporate governance.
His book, Getting the Government America Deserves: How Ethics Reform Can Make a Difference, was published by Oxford University Press in January 2009. He has written op-eds on government ethics for various publications including The New York Times, the Washington Post and the Los Angeles Times, and he has been interviewed serveral times on governmnent ethics and corporate ethics by National Public Radio All Things Considered as well as Minnesota Public Radio News.
Professor Painter is the author of two casebooks: Securities Litigation and Enforcement (with Margaret Sachs and Donna Nagy; West 2003; Second Edition, 2007) and Professional and Personal Responsibilities of the Lawyer (with Judge John T. Noonan Jr.; Foundation 1997; Second Edition, 2001) (3rd Edition forthcoming). He has written dozens of articles, book reviews, and essays, including a series of papers with Minnesota colleague Claire Hill on the personal responsibility of investment bankers, an essay on government ethics and bailouts, and another paper "Ethics and Corruption in Business and Government: Lessons from the South Sea Bubble and the Bank of the United States" that was published by the University of Chicago Law School as the 2006 Maurice and Muriel Fulton Lecture in Legal History. His essay, "The Dubious History and Psychology of Clubs as Self Regulatory Organizations," appeared in the American Academy of Arts and Sciences Occasional Paper Series in 2004.
Former Bush Ethics Lawyer Files Complaint Against FBI Director for Email Disclosures
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FBI Director James Comey testifies during a hearing before the House Judiciary Committee in Washington, D.C., on June 11, 2014.
Alex Wong/Getty Images
A former chief ethics lawyer at the White House, who served during George W. Bush’s presidency, has filed an ethics complaint against FBI Director James Comey. In an op-ed published in the New York Times on Sunday, Richard W. Painter writes that he filed a complaint against the FBI for violating the Hatch Act, "which bars the use of an official position to influence an election." He filed the complaint with both the Office of Special Counsel and the Office of Government Ethics.
Painter, who was the head White House ethics lawyer between 2005 and 2007 and now supports Hillary Clinton, says Comey violated the Hatch Act when he sent the letter to lawmakers on Friday informing them of the newly discovered emails. “This letter, which was quickly posted on the internet, made highly unusual public statements about an FBI investigation concerning a candidate in the election,” writes Painter. “The letter was sent in violation of a longstanding Justice Department policy of not discussing specifics about pending investigations with others, including members of Congress.”
Although Comey’s previous statements may be concerning, there is no actual evidence yet that the FBI director actually wanted to influence the election. Still, that is irrelevant as far as the Hatch Act is concerned.
Painter also warns that letting this precedent stand would be dangerous:
This is no trivial matter. We cannot allow FBI or Justice Department officials to unnecessarily publicize pending investigations concerning candidates of either party while an election is underway. That is an abuse of power. Allowing such a precedent to stand will invite more, and even worse, abuses of power in the future.
Speaking to LawNewz.com, Painter says he doesn’t buy the argument that Comey had to send the letter because he had promised to update lawmakers on the issue. The FBI director could have easily sent the letter two weeks later, after voters had gone to the polls, and no one would have been able to argue that he “breached that promise to update,” particularly considering the reports that “the FBI apparently had not even looked at the emails because they did not have a search warrant.”
Hill, Claire A.: Better bankers, better banks: promoting good business through contractual commitment
I. Walter
53.10 (June 2016): p1518.
Copyright: COPYRIGHT 2016 American Library Association CHOICE
http://www.ala.org/acrl/choice/about
Hill, Claire A. Better bankers, better banks: promoting good business through contractual commitment, by Claire A. Hill and Richard W. Painter. Chicago, 2015. 279p bibl index afp ISBN 9780226293059 cloth, $26.00; ISBN 9780226293196 ebook, $18.00
53-4469
HG1573
2015-2748 CIP
Banking is special. It channels the "air supply" of the global economy from those who have it to those who need it--from the beginning a critical role in improving social welfare. We want banks to be efficient, creative, and competitive. Bank failures can be equally special, with contagion spreading rapidly across geographies and markets and sweeping beyond the financial sector into the real sector of economies. And banks inevitably face plenty of conflicts of interest that must be managed. The contention is there is still plenty of "privatization of returns and socialization of risks" in the system even after recent regulatory reforms. What is needed to manage these sometimes conflicting goals is an alignment of interests. Eminent legal scholars Hill and Painter (both, Univ. of Minnesota Law School) focus on one aspect of this conundrum, the incentives that motivate the work of bankers. They basically propose the introduction of the word "malus" (personal liability) in bankers' vocabulary alongside their favorite term, "bonus." The authors call this "covenant banking," something others would call "skin in the game." They anchor their logic in the great traditions of business and banking partnerships and do indeed make a compelling argument. Fortunately things are gradually if imperfectly moving in their direction. Summing Up: *** Highly recommended. Upper-division undergraduate through professional readership.--I. Walter, New York University
Source Citation (MLA 8th Edition)
Walter, I. "Hill, Claire A.: Better bankers, better banks: promoting good business through contractual commitment." CHOICE: Current Reviews for Academic Libraries, June 2016, p. 1518. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA454942880&it=r&asid=324fd462bff7fa035d74288012fae112. Accessed 27 Mar. 2017.
Gale Document Number: GALE|A454942880
Getting the Government America Deserves: How Ethics Reform Can Make a Difference
Frank Anechiarico
8.4 (Fall 2009): p383.
DOI: http://dx.doi.org/10.1089/e1j.2009.8402
Copyright: COPYRIGHT 2009 Mary Ann Liebert, Inc.
http://www.liebertpub.com/publication.aspx?pub_id=101
Richard W. Painter, Getting the Government America Deserves: How Ethics Reform Can Make a Difference. New York, NY: Oxford University Fress, 2009, 328 pp., $65.00 (hardcover).
OBSERVING GOVERNMENT ETHICS
ETHICAL SCANDALS and the feeding-frenzies that accompany them have been around since the birth of the Republic. However, there was little contemporary analysis of the character assassination, gross influence peddling, and self-dealing that tainted the founding generation. Perhaps the clearest thought on what most directly undermines the quality of government was the work of James Madison and Alexander Hamilton in the Federalist. Federalist numbers 10 and 51 identify the central problem of republican government as the "violence of faction" and recommend as a palliative that "ambition be made to counteract ambition." (1) This ought to be the prime directive for those studying the roots of government corruption and then recommending ways to reform public ethics. What factions have power and over what? Are powerful factions counteracted by opposition in the private or nonprofit sector, by government regulation, by law enforcement, or by civic engagement?
The situation described in Painter's book is Madison's nightmare. It is not the first time faction has run amuck, but it may be that the distribution of power in the United States is so entrenched that distinguishing the legitimate exercise of national authority from violations of public trust has become problematic. Discourse over what is "right" in the public sphere is conflated with what is cheaper, quicker, and good for, uh, Halliburton.
Professor Painter takes on the biggest questions raised by the array and relative power of factions in national government. Painter has served on the law faculties of the Universities of Illinois, Oregon, and currently Minnesota, where he holds a chair in corporate law. From February 2005 to July 2007, before taking the position at Minnesota, Painter was Associate Counsel to the President in the White House Counsel's office. His role in the White House was chief ethics officer. This book is a compendium of current rules regarding campaign finance and conflicts of interest, particularly. For example, a section on the ethical problems of judicial elections is a good summary of the ethical danger of mixing campaigning and judging. However, Painter's analysis, considering the topic of national ethics reform, is narrow. The book misses many of the larger problems of government ethics, as well as the more evident Madisonian factors which underlie them.
Most of the material in the book has been covered by other scholars, notably by Larry Sabato on campaign finance and Michael Johnston on systemic corruption. (2) The take on government ethics by Painter is to consider the boundaries set out by the law and the problems presented by non-conforming official behavior. While the book cites a large number of sources in nearly four hundred footnotes, all but around sixty are to newspapers, court cases, statutes, and regulations. Those remaining cite legal scholarship and several economists. Sabato and Johnston are both political scientists. Nor does Painter include citations to other prominent scholars of ethics and corruption in the social sciences such as H. George Frederickson, Lenore Kuo, John Kleinig, and Steven Cohen. (3)
SYSTEMIC CORRUPTION
Neglect of the wider literature on government ethics narrows Painter's analysis and his ability to make a persuasive case for his subtitle: "How Ethics Reform Can Make a Difference." For example, Painter defines systemic corruption as a violation of the fiduciary responsibility of government officials, which "occurs when external groups ... advance an agenda" that goes beyond "arguments that appeal to the general welfare...." Systemic corruption occurs when "trade associations and nonprofit public policy organizations ..." are found
... manipulating the lax regulation of the revolving
door in and out of government, making
generous campaign contributions, hiring
lobbyists who raise money for political campaigns,
providing free travel for government
officials to "conferences" in resort locations,
and other strategies, divert government officials
away from the public interest and toward
a narrower agenda [sic] (pp. 8-9).
This definition shapes the rest of the book. But there's no depth to it. It centers on the self-evident relationship between corporate interest and government policy making. While this relationship is dismaying, it is hardly shocking and it needs explaining in order to allow the author to move on to useful prescriptions. Michael Johnston offers a framework directly relevant to discussing and understanding the issues raised by Painter. The definition noted above is part of the syndrome that Johnston calls "elite cartels." As Johnston puts it:
Elite Cartel corruption occurs among, and
helps sustain, networks of political, economic,
military, bureaucratic or ethnic and communal
elites, depending on the society in question. It
helps them defend their hegemony in a climate
of increasingly political competition and only
moderately strong institutions. (4)
Without putting the ethical issues raised by Painter in context either comparatively or historically, the book assumes that the reader will understand that the public interest is whatever it is government officials ought to be thinking about, apart from the demands of particular interests. This greatly disadvantages the rest of the book. Readers, who may think they know a public from a private interest and who are guided by Painter's definition of systemic corruption, will be puzzled by the idiosyncratic narrative of specific policy areas in later chapters.
OUTSOURCING AND "INHERENTLY GOVERNMENTAL FUNCTIONS"
An area that has received a great deal of interest from scholars in the past twenty-five years is government contracting, especially as the size and scope of contracts expands. Chapter Four, "Outsourcing Executive Branch Functions," spends its twenty pages describing the quandaries of several government employees and then recounting the excellent analysis by the Government Accountability Office of the use of contract employees in the Defense Department. Pointer recommends "an alternative that is less intrusive than a full-blown ethics regime for federal contractors" which would have contractors "integrate ethics rules, ethics training, and ethics advisory functions into their personnel training" (p.115). But there is a great deal of evidence showing that this recommendation, widely adopted around the world, is disregarded when real money is at stake. (5)
ETHICS REFORM
The major illustration used by Painter in this chapter is the appearance of a conflict of interest when Halliburton, which Vice Fresident Richard Cheney led as chief executive officer, received hundreds of millions of dollars in defense contracts for reconstruction and troop support in Iraq. Painter mentions in passing that the Defense Contract Audit Agency questioned over one billion dollars in Halliburton' s charges to the government. Here Painter suggests "limit[ing] the aggregate value of contracts" awarded to a particular private entity. Would limiting Halliburton to, say, five hundred million dollars in defense contracts in Iraq deal with the appearance of a conflict of interest? What influence, if any, was exercised by the audit agency?
The most striking thing about Chapter Four is what is not included. Certainly Halliburton's conduct requires more than a passing mention. However, if defense contracting is on the table, we expect some mention of the most prominent scandal of the past decade, the effects of outsourcing the operation of Walter Reed Army Medical Center. The flurry of congressional investigations following the expose in the Washington Post resulted in the resignation of the Secretary of the Army, the removal of two directors of the Center, and termination of the contract with IPA Services. (6) Further, the disastrous conduct of Blackwater while under contract to provide security to State Department personnel in Iraq has become a touchstone in any discussion of outsourcing. (7)
No chapter on outsourcing can include every scandal--there is an unfortunately wide selection. However, the termination of contracts with both Blackwater and IPA raise questions about the interpretation of what the Federal Acquisitions Regulations (FAR) call "inherently governmental functions." (8) FAR is mentioned, but, again, in passing and with regard to conflicts of interest.
Nearly a generation of scholarship in public administration has assessed the effects of the marriage of private sector mechanisms to public sector missions, which is called the New Public Management. (9) Contracting out and privatization, the smaller, "flexible" force sent into Iraq, and the use of contractors to let contracts are all offshoots of this movement. Some reference to the extensive and penetrating critiques of the movement would allow Painter to go beyond recommending ethics rules and training. (10) Returning to Painter's warning about how interests may "divert" officials away from the public interest, we need to understand the premises and consequences of outsourcing to see where government has been diverted and by whom.
"THE REVOLVING DOOR" AND OTHER ENDEMIC OUTRAGES
The problem of the revolving door is mentioned a several points in the book. Regulations on personnel trafficking between contractors and the government are indeed lax, as Painter says. The Honest Leadership and Open Government Act of 2007 restricts former members of the House for one year before they can return to lobby the Congress. Former Senators are restricted for two years. Painter points out that the restrictions hardly limit the exercise of influence. Here is more evidence that Johnston is correct in calling the American system one of elite cartels regulated by "moderately strong institutions." The exercise of control by those in the closed circle of power is palpable in Painter's description of the revolving door, earmarks, insider trading, and, of course, lobbying.
As far back as the mid-1960s, Theodore Lowi identified policy area cartels that he called iron triangles, a metaphor picked up by President Ronald Reagan. (11) Composed of congressional subcommittees, executive agencies, and private interest groups, iron triangles are stable sub-governments. Between Lowi and Johnston, policy makers and scholars occasionally worried about the democratic and ethical consequences of closed governance. Painter's book is the latest evidence that the system remains closed.
To present a serious reform agenda, Painter must first recognize the long-term, embedded power structure that confines reform to keeping a Senator away from his or her former colleagues for two years, but does nothing about allowing a lobbyist to write legislation, while sitting in Capitol offices. The examples Painter concludes with are evidence of the growth and influence of elite cartels. One is the infusion of partisan strategy into White House policy making by giving political advisors like Karl Rove a large, powerful staff and direct access to the president. Painter objects to this and would like to remove partisan strategy from the president's office. He also objects to the not-unrelated "cognitive bias toward concealment," but talks himself out of prosecution as an answer. Wider and more direct reporting from more sources "should be designed with an organization's exposure to the psychology of the cover-up in mind" (p. 285). This is balanced and useful, but in order to connect the dots, Painter needs a framework like Lowi's, Johnston's, or Reagan's. The framework Painter does have reference to is loosely borrowed from the author's work on corporate ethics, especially the Sarbanes-Oxley regulations. (12) This keeps the book connected with the most prominent ethical problems in national politics, but the larger political economy has a history and structure even more complex and potentially dangerous than that of American corporations. Painter, therefore, concludes the book quite modestly. "The proposals suggested in this book are designed to facilitate the reform of a system this author believes to be in need of repair.... The government in the United States will be the government citizens deserve." Blaming the people for the poor quality of governance may be warranted, but which people?
LESSONS FROM THE BUSH WHITE HOUSE, 2005-2007
From his vantage point in the White House for two and a half years, Painter, especially since his job was ethics, had a remarkable view of the way that partisanship, private interest, and official position turn into, for example, faith-based aid to local governments, advocacy of privatizing social security, and enhanced interrogation techniques. The White House is the most important of the vertices of power, policy, and values. The title of the book and the author's resume promise an analysis of how these factors reinforce and modify each other. Such an analysis is the work of a cadre of scholars, journalists, and jurists. It is far from complete and would be advanced substantially if an insider were able to detail just who was involved in deciding and implementing any of the policies he mentions.
It is not the case that Painter's book should be a great deal longer, nor is it argued that he is looking in the wrong direction. However, if we do want to blame the people for our quality of governance, we have an obligation to tell them directly why systemic ethics violations are so widely ignored, and why these violations are then twisted into accepted practice and even virtue. The book's central illustrations indicate that while prominent public officials may be questioned about their behavior, they are not held to account for giving us the government that they think we deserve. Factions hold sway; ambition is not counteracted.
DOI: 10.1089/e1j.2009.8402
(1) James Madison, The Federalist, "Federalist No. 10, The Same Subject Continued: The Union as a Safeguard Against Domestic Faction and Insurrection," New York Packet, Friday, November 23,1787; Alexander Hamilton or James Madison, "Federalist No. 51, The Structure of the Government Must Furnish the Proper Checks and Balances Between the Different Departments," New York Packet, Friday, February 8, 1788.
(2) Larry Sabato, Dirty Little Secrets: The Persistence of Corruption in American Politics (New York: Crown, 1996); Michael Johnston, Syndromes of Corruption: Wealth, Power, and Democracy (New York: Cambridge University Press, 2006).
(3) H. George Frederickson and Richard K. Ghere, eds., Ethics in Public Management (Armonk, NY: M.E. Sharpe, 2005); Frank Anechiarico and Lenore Kuo, "The Justified Scoundrel: The Structural Genesis of Corruption," Journal of Social Philosophy 26 (1) (1995), pp.147-161; John Kleinig, The Ethics of Policing (New York: Cambridge University Press, 1996); Steven A. Cohen, William Eimicke, and Tanya Heikkila, The Effective Public Manager, 4th ed. (San Francisco: Jossey-Bass, 2008).
(4) Johnston, Syndromes of Political Corruption, p. 3.
(5) Transparency International, Global Corruption Report, 2004: Special Report-Political Corruption (Berlin, Transparency International, 2004).
(6) Dana Priest and Anne Hull, "Soldiers Face Neglect, Frustration at Army's Top Medical Facility," Washington Post, February 18, 2007, p. A 01.
(7) "US Security Firm Blackwater Ends Iraq Operation," Agence France-Presse, May 7, 2009,
(8) U.S. General Services Administration Acquisitions Manual, Part 507, Acquisitions Planning, Subsection 507.103.a.6.
(9) Michael Barzelay, The New Public Management: Improving Research and Policy Dialogue (Berkeley: University of California Press, 2001).
(10) Tom Christensen-Laegreid, Transcending New Public Management (Ashgate and Gower: Farnum, England, 2007).
(11) Theodore J. Lowi, The End of Liberalism (New York: Norton, 1969); Lou Cannon, "Reagan Ruled With a Soft Fist," Washington Post, December 19, 1988, p. A 01.
(12) Sarbanes-Oxley Act of 2002 (Pub. L. 107-204,116 Stat. 745, enacted July 30, "Public Company Accounting Reform and Investor Protection Act").
Frank Anechiarico is Maynard-Knox Professor of Government and Law at Hamilton College.
Address correspondence to: Frank Anechiarico
Department of Government
Hamilton College
Clinton, New York 13323
E-mail: fanechia@hamilton.edu
Anechiarico, Frank
Source Citation (MLA 8th Edition)
Anechiarico, Frank. "Getting the Government America Deserves: How Ethics Reform Can Make a Difference." Election Law Journal, Fall 2009, p. 383+. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA213602862&it=r&asid=defdf21bf052560c270af6d70fb6da44. Accessed 27 Mar. 2017.
Gale Document Number: GALE|A213602862
Book Review: Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment by Claire A. Hill and Richard W. Painter
blogs.lse.ac.uk/lsereviewofbooks/2016/02/03/book-review-better-bankers-better-banks-promoting-good-business-through-contractual-commitment-by-claire-a-hill-and-richard-w-painter/
2/3/2016
In Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, Claire A. Hill and Richard W. Painter provide an account of the changes to banking that encouraged the risk-taking that became a factor in the global financial crisis, and propose a solution: ‘covenant banking’. The authors’ suggestion of binding bankers to contracts that encourage accountability to stakeholders and increase personal liability for losses is an essential contribution to debates over the regulation of the financial sector. However, the wider structural factors that enable excessive risk-taking behaviour remain somewhat overlooked, writes Mehmet Kerem Coban.
Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment. Claire A. Hill and Richard W. Painter. University of Chicago Press. 2015.
Better Bankers, Better BanksHistory is marked by many turning points which we may call critical junctures. The global financial crisis has been one example. The crisis underscored various deficiencies in the financial and banking sectors as well as with the regulatory regime defining legitimate social behaviour within them.
Since the crisis, ordinary citizens are discussing how to regulate these sectors that have caused enormous social, economic and political consequences. Better Bankers, Better Banks: Promoting Good Business Through Contractual Commitment is not just another analysis of the causes of the crisis, but rather contributes to the debate on how to regulate the system. Claire A. Hill and Richard W. Painter have legal backgrounds, which makes the book rich in terms of court filings reporting systemic misbehaviour. They propose a ‘covenant banking’ whereby individual bankers (read: elite and highly-paid bankers) are liable to cover fees and sanctions and add capital to the bank in cases of insolvency. The authors reach this solution by showing changes in culture and business models that have led to greater focus on the material benefits that attract bankers compared to other-regarding motives of banking, a social practice whose primary traditional role is intermediation between savers and borrowers.
Let us focus on a few important pillars on which the authors build this solution. Firstly, the sector has undergone changes in culture. Investment banks used to be partnerships between individual bankers; however, since the 1970s, they are public companies where partners do not have to assume personal liability in case of failure. This has been accompanied by a rising trend in external financing leading to ‘gambling’ with others’ money. Due to limited personal liability and more external financing, bankers have arguably changed the way that they interpret risk-taking and most probably redefined their risk preferences. What was neglected with this trend is that bankers (and banks) have more leverage with less equity and capital set aside, as Anat Admati and Martin Hellwig persuasively highlighted.
Secondly, the moral hazard problem has become more acute in various forms, including the mystification of banking services and the advice that bankers provide as well as the misrepresentation of their practice and its consequences. LIBOR manipulation is a showcase for this deterioration of values and social norms (49-53). Another example is the Lewin-McCain Report on JP Morgan. Even though they were aware of the low-quality credit profile of potential borrowers, bankers chose to ignore this fact (43-44).
Thirdly, the relationship between customers and clients and bankers has changed. Previously, relationship-based banking had prioritised the reputation of the bank and its bankers. However, since the advent of transaction-based banking, bankers lost the appetite to maintain their reputations. We should also note what the authors do not reflect, which is that transaction-based banking might have motivated borrowers to lose their loyalty to the bank with which they work. When both sides lose loyalty, each side will prioritise individual benefits without any regard to the interests of others. The consequence of bankers losing sight of the interests of others, such as taxpayers, homeowners, shareholders and stakeholders in society at large, is ‘reputation mining’, in the words of George A. Akerlof and Robert J. Shiller.
Wall Street BullImage Credit: ‘Wall Street Bull’ (Sam valadi)
Some structural changes also contributed to bankers ignoring the consequences of their fraudulent practices. These involve rising competition not only at the domestic level, but also internationally, as well as regulatory changes and competition. When changes in the structure, culture and business model coincide with greater focus on material gains in terms of money, status and self-esteem, a less cautious attitude toward risk-taking and a sector ethos defined by profit-seeking with high leverage and excessive risk-taking behaviour, the interests of others can easily be ignored, while limited liability allows individual bankers to privatise gains but socialise losses.
The solution that Hill and Painter propose in the book is ‘covenant banking’. The logic behind this is boosting ownership in responsible banking and accountability to stakeholders among individual bankers. For the authors, highly-paid bankers earning more than $3 million per year could be liable in cases of insolvency or financial charges; personal liability is specified in their contracts to make the commitment credible, while enabling legal procedure if bankers do not comply with the terms and conditions of the contract. The second solution is for bankers who are earning less than around $1 million per year to be given some of their annual pay in the form of assessable stocks so that they are invested in the resiliency of the bank (note that the authors do not clearly state how they find the $3 million and $1 million thresholds to be appropriate). Hill and Painter argue that although government and regulators can play an essential role in introducing, implementing and supervising such contracts, banks can adopt contractual employment schemes for their own benefit as bankers would be incentivised to take fewer risks. In the meantime, by paying less in cash but more in the form of assessable stocks, banks could increase retained earnings that may add up to equity and/or capital. Hill and Painter note that there might be objections to the solution mainly due to potential challenges in adoption, implementation and feasibility.
This solution is valuable insofar as changes in the banking sector and the ethos of profit-maximisation regardless of social and economic consequences – what the authors call ‘promotion focus vs. prevention focus’ – are considered. What could be further reflected upon is the bigger picture. Besides structural and cultural changes, a bigger picture would entail credit-debt growth as financial cycles have become much more credit-driven. From the perspective of individual households, as they feel more pressure on their purchasing power due to a lower pace of real wage growth, they become more dependent upon credit (see also Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy). Blaming bankers may not be the best way to address these systemic deficiencies, although attempts at boosting ownership and accountability, albeit imperfect, welcome further discussion on improving the regulatory framework. However, without addressing the major drivers of cultural change and business models that aim to adapt to particular macroeconomic and institutional conjunctures in the world, contractual commitments may not fully address the inner problem of excessive risk-taking and the rewards of such practices.
Finally, what is also paradoxical about the authors’ solution is the claim that the law can crowd out morality. The solution seems like a legal mechanism to bind bankers to a more responsible banking, without considering the moral aspects, let alone concerns as to whether such commitments are credible. For example, contracts that bind bankers personally in cases of insolvency or coverage may not discourage them from taking excessive risks; instead, they may continue to do so and be paid highly. Bankers may leave money aside in case they have to step in to cover losses or fines. Consequently, without addressing major structural factors that lead bankers to take excessive risks, convenant banking could only remain as a minor and arguably negligible solution to bankers’ immorally excessive, risk-taking behaviour.
Overall, Hill and Painter’s contribution should not be overlooked. The book is an essential contribution to the current debate on policy and institutional design in financial and banking sector regulatory frameworks at the micro-level, compared to Basel-type macro-level regulations.
Mehmet Kerem Coban is a PhD Candidate and Deputy Editor-in-Chief of the Asian Journal of Public Affairs at the Lee Kuan Yew School of Public Policy, National University of Singapore. His PhD thesis focuses on the political economy of financial regulation in emerging markets. He obtained his Master’s Degree in Development Studies at the Graduate Institute of International and Development Studies, Geneva. His main research interests are international political economy, the political economy of development, financial liberalization and regulation and development aid. Email: m.keremcoban[at]u.nus.edu. Read more reviews by Mehmet Kerem Coban.
Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics.
Glenn Reynolds: Give bankers skin in the game
Glenn Harlan Reynolds 4:34 p.m. ET Oct. 29, 2015
Gambling billions in a single trade might vanish if losses hit traders' personal wallets.
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The financial crisis of 2008-09 is over but not gone. We passed laws and regulations that probably won’t help much. And despite a lot of harsh words aimed at Wall Street and the banks, President Obama pretty much let individual bankers escape unscathed — perhaps because Wall Street and the banks were among his biggest campaign contributors. (That phenomenon has led some to call him “President Goldman Sachs.”)
But relying on regulators to control banks and Wall Street is likely to fail anyway. Leaving aside their extensive political influence, financial types are likely to stay ahead of regulators because 1) they’re usually smarter; and 2) they understand their industry better. Plus, they can change approaches faster than regulators can amend regulations.
Even so, the apparent change in the financial community over the past few decades has been dramatic. The economic crisis brought the activities of investment bankers into the limelight, and suddenly it seemed the staid buttoned-up banker types of the popular imagination had been transformed into wild speculators risking billions on a single trade. What happened?
According to Claire Hill and Richard Painter in their new book, Better Bankers, Better Banks:Promoting Good Business through Contractual Commitment, the reason is that the billions they’re risking on a single trade aren’t their own but somebody else’s. Hill and Painter want to do something about it by requiring that financial operators have their own assets at stake.
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This isn’t a new idea. Until fairly recently, big investment banks such as Goldman Sachs or Salomon Bros. operated as general partnerships. In a general partnership, the partners are liable — individually — for debts of the firm. With potentially unlimited liability if things went wrong, the partners had an incentive to be comparatively cautious. (With corporations, on the other hand, shareholders aren’t on the hook for the firm’s debts. The most they can lose is the value of their shares.) Without unlimited liability, incentives are different. As Hill and Painter note, Salomon’s culture changed very rapidly after it became a corporate entity in which the partners, now called “managing directors,” weren’t personally at risk. Within a few years it went from a staid, conservative business to the anything-goes entity described in Michael Lewis’ Liar’s Poker.
It’s easy to engage in risky schemes when success gets you a huge bonus, while failure just costs someone else some money. One solution would be to require investment banks to be organized as general partnerships. (There’s still such a requirement for law firms). But Hill and Painter think we don’t need to go that far.
Their solution is something they call "covenant banking," in which bankers’ compensation is at risk for bad deals. Not only would they get bonuses when things go well, but they’d have to cough up past bonuses, and salary, when deals go badly for clients.
Such an approach might be required by law, but Hill and Painter think that banks might want to do it voluntarily. As a client, wouldn’t you rather deal with a banker who stands to lose money if you do? Shareholders might even demand that their companies do business with such banks, as a way of hedging against risk. Wouldn’t it be safer to do business with people whose incentives align with your goals? (I always say I’d like my life insurance company to be in charge of my health care because it would cost them a lot of money if I died; my actual health care company, on the other hand, might save money if I kicked off quickly.)
I’m not enough of an expert on banking and finance to say whether Hill and Painter have it right with covenant banking. But I do think that — across many sectors of our society — our problems come from having people in charge who don’t feel the pain when their various schemes go bad. As a theme for the coming decade, we could do a lot worse than requiring skin in the game. And, sad to say, we probably will.
Glenn Harlan Reynolds, a University of Tennessee law professor, is the author of The New School: How the Information Age Will Save American Education from Itself, and a member of USA TODAY's Board of Contributors.
In addition to its own editorials, USA TODAY publishes diverse opinions from outside writers, including our Board of Contributors.To read more columns like this, go to the Opinion front page.
Fining Bankers, Not Shareholders, for Banks’ Misconduct
Fair Game
By GRETCHEN MORGENSON FEB. 6, 2016
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The London headquarters of Barclays. The bank and Credit Suisse agreed to pay a combined $154.3 million to settle charges that they misrepresented their private stock trading services. Credit Olivia Harris/Reuters
Ho-hum, another week, another multimillion-dollar settlement between regulators and a behemoth bank acting badly.
The most recent version involves two such financial institutions, Barclays and Credit Suisse. They agreed last Sunday to pay $154.3 million after regulators contended that their stock trading platforms, advertised as places where investors would not be preyed on by high-frequency traders, were actually precisely the opposite. On both banks’ systems, investors trying to execute their transactions fairly were harmed.
As has become all too common in these cases, not one individual was identified as being responsible for the activities. Once again, shareholders are shouldering the costs of unethical behavior they had nothing to do with.
It could not be clearer: Years of tighter rules from legislators and bank regulators have done nothing to fix the toxic, me-first cultures that afflict big financial firms.
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Regulators are at last awakening to this reality. On Jan. 5, for example, the Financial Industry Regulatory Authority, a top Wall Street cop, announced its regulatory priorities for 2016. Among the main issues in its sights, the regulator said, was the culture at these companies.
“Nearly a decade after the financial crisis, some firms continue to experience systemic breakdowns manifested through significant violations due to poor cultures of compliance,” said Richard Ketchum, Finra’s chairman. “Firms with a strong ethical culture and senior leaders who set the right tone, lead by example and impose consequences on anyone who violates the firm’s cultural norms are essential to restoring investor confidence and trust in the securities industry.”
But changing behavior — as opposed, say, to imposing higher capital requirements — is a complex task. And regulators must do more than talk about what banks have to do to address their deficiencies.
Andreas Dombret is a member of the executive board of the Deutsche Bundesbank, Germany’s central bank, and head of its department of banking and financial supervision. In an interview late last year, he said he was determined to tackle the problem of ethically challenged bankers.
“If behavior doesn’t change, banks will not be trusted and they won’t be efficient in their financing of the real economy,” he said. “A functioning banking system must be based on trust.”
Mr. Dombret is a regulator who knows banking from the inside, having held executive positions at J.P. Morgan and Bank of America.
Most companies have codes of ethics, Mr. Dombret said, but they often exist only on paper.
Regulators could help encourage a more ethical approach by routinely monitoring how a bank cooperates with its overseers, Mr. Dombret said.
“How often is the bank the whistle-blower?” he asked. “Not only to get a lesser penalty but also to show that it won’t accept that kind of behavior. We are seeing more of that.”
Regulators may have other tools to curb dubious activities, he said. One idea is to increase the capital requirements of banks that are found to have violated rules and laws repeatedly. That not only enhances the safety of its operations but also imposes a real cost on future profits.
“If there was a series of misconduct, would that require increasing capital or asking for more equity?” Mr. Dombret asked. “We have to think through how you would penalize misconduct.”
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A different proposal comes in a new book by Claire A. Hill and Richard W. Painter, professors at the University of Minnesota Law School. In “Better Bankers, Better Banks,” they argue for making financial executives personally liable for a portion of any fines and fraud-based judgments a bank enters into, including legal settlements.
The professors call this covenant banking. And it looks a lot like the kind of personal liability that was a fact of life among the top Wall Street firms when they were private partnerships.
With their own money at risk, partners of Salomon Brothers, Lehman Brothers and Goldman Sachs were much more careful about their business dealings. When these firms became public companies funded more by outsiders’ money, that self-discipline diminished.
“In the old days, because a partnership paid the fine, it would all come out of the partners’ pockets,” Mr. Painter said in an interview. “We’re not going to roll back the clock, but what we can do is come up with a contractual agreement in the compensation package that mimics some of that structure.”
Their plan contains a crucial element, requiring the best-paid bankers in the company to be liable for a fine whether or not they were directly involved in the activities that generated it. Such a no-fault program, the professors argued, would motivate bankers not only to curb their own problematic tendencies but to be on the alert for colleagues’ misbehavior as well.
This would help instill a culture, the law professors wrote, “that discourages bad behavior and its underlying ethos, the competitive pursuit of narrow material gain.”
Putting such a covenant in place would also help eliminate the problem of banking regulators who become captured by the institutions they are supposed to police. “Those in the best position to choose conduct that is appropriate may not be regulators but, rather, bankers with a stake in the bank,” the professors wrote.
If bankers aren’t willing to institute a system involving personal liability, regulators and judges could require it as part of their settlements or rulings, Ms. Hill said in an interview. “Something like covenant banking could be included in nonprosecution agreements, for example,” she said, or a judge overseeing a case in which a company is paying $50 million could require individuals to pay $10 million of that personally.
A regulator could give a company the choice of a far lower fine if it were to be paid by managers, not shareholders. A company choosing to pay the higher fine and billing it to the shareholders would have some explaining to do, Mr. Painter said.
While the idea of a covenant is centered on banking, it could easily expand to other businesses. But the focus on finance is justified, Ms. Hill said.
“We don’t take the position that this should only be about banks,” she said. “But banks can do huge damage, and we have seen this ethos in the industry that cries out for responsibility.”
Tighter regulations and billions in fines levied on financial firms have had little impact on banking culture, as the Barclays and Credit Suisse cases make clear. It’s high time to up the ante.