Transparency International, a non-governmental organization, conducted a poll of 114,000 people in 107 countries on the problem of corruption.
More than 50 percent of the respondents said they believe that global corruption has gotten worse over the past two years.
According to the survey, a lack of ethics – dishonesty – is on the rise almost everywhere. Not surprisingly, “politics” was declared the most corrupt institution in 51 of the countries surveyed, but it has serious competition.
Banking is a major industry infected by corruption. Banks in Ireland, Greece, Spain, Portugal and some other countries, were caught up in the crisis of 2008.
The Irish bank bailouts were the first to hit a European country. Leaked audio tapes and phone conversations of top officials at Anglo Irish Bank revealed that they lied to the government about their bank’s financial condition as the real estate bubble was about to burst. This made it more difficult for the government to respond effectively. The Irish bank bailout has cost Irish taxpayers and the European Union tens of billions of dollars, and Ireland is still in the throes of a severe recession. A similar crisis occurred in the United States, only on a much larger scale.
Without fully understanding the scope and nature of the problem, the U.S. government felt compelled to bailout Wall Street banks, which were deemed too big to fail. The bank bailout probably prevented the U.S. economy, and possibly the world economy, from collapsing into a second Great Depression. Our economy remains weak, and unemployment is too high.
It appears that a culture of greed and a lack of ethics are still alive on Wall Street. Recently, a prominent New York law firm took a survey of 250 Wall Street professionals from dozens of financial companies. The survey revealed that 23 percent of responders “had observed or had firsthand knowledge of wrongdoing in the workplace.” Nearly 25 percent said that they would “engage in (unethical) insider trading to make $10 million if they could get away with it.” One-fourth of respondents also said that pay and bonus structures encourage employees to compromise ethical standards or break the law.
More worrisome, 17 percent of those surveyed expected “their leaders were likely to look the other way if they suspected a top performer engaged in (illegal) insider trading,” and “15 percent doubted that their leadership, upon learning of a top performer’s crime, would report it to authorities.” Overall, “28 percent of respondents felt that the financial services industry does not put the interests of clients first.” Despite these faults, Wall Street banks are getting bigger, and their profits are increasing.
The New York financial industry is operating the same way it did before the crisis of 2008. This shows that reform still is needed.
In order to avoid another bank crisis, Congress should pass a new Glass-Steagall Act, which separates traditional commercial banking from high-risk investment banking.
Most importantly, high moral values and accountability must be restored throughout our society; all of us should examine our conscience and rededicate ourselves to being honest in our dealings with others – especially those of us who are the leaders in politics and finance.
Anthony J. DiStefano spent 29 years in state and federal government, including working with the Ohio General Assembly, the U.S. House of Representatives and two executive agencies of the federal government.