“Wall Street is not like other industries. As repulsive as it is that executives at Volkswagen sought to evade United States’ emission standards, that deceit is not likely to bring down the world’s economy.
But when things go wrong on Wall Street, the consequences can be devastating for the rest of us. On Wall Street, contagion is a real problem. That is why it is not enough to require banks to hold more capital or to have them reduce the amount of risky assets they have leveraged on their balance sheets or to prevent them from making the kinds of proprietary bets that sometimes go awry.
Two things still need to change on Wall Street for there to be meaningful reform. First, the culture of what constitutes success inside a Wall Street firm – who gets promoted and put in charge and for what reasons — needs to change. Second, the compensation system needs a total revamp so that bankers, traders and executives are no longer rewarded for taking big risks with other people’s money, putting themselves in a position to win big if their risk-taking pays off but not to be held accountable if things go wrong.”