In the wake of the UK LIBOR scandal, an LRN team collaborated to very quickly draft a set of comments to the HM Treasury’s Banking Reform Bill Team on a series of proposals for implementing the recommendations of the Independent Commission on Banking in the UK. Those proposals were set forth in a White Paper entitled "Banking Reform: Delivering Stability and Supporting a Sustainable Economy." The comment period ended on September 6th. Here is a summary:
LRN’s believes that the U.K. Government has the opportunity to incorporate into the banking reform proposals suitable provisions related to organizational culture. Quite clearly, the financial crisis came about through the complex interaction of multiple factors at the institutional and systemic levels, including factors related to banking regulation, governance, risk management, competition, and others. We believe that there has been insufficient discussion and analysis of the critical role of organizational culture in the crisis. More particularly, we believe the Government’s reform proposals should properly reflect the influence of organizational culture on behaviors, attitudes to risk, individual and collective decision making, and the ethical culture generally within financial institutions and the banking industry as a whole. Regulatory intervention is a necessary, but insufficient response to this crisis. We respectfully submit that goals of the proposed reforms should include promoting much greater self-governance in the banking sector.