Carney: Don't check core values at the door
By Adela Talbot
February 28, 2013
Much needed, regained trust in the world’s banking institutions will come at a high moral price, said Canada’s bank governor Mark Carney as he delivered the seventh annual Thomas d’Aquino Lecture on Leadership at the new Ivey building Tuesday afternoon.
Blaming the recession and resultant economic downfall around the world on the conduct of those in the industry, Carney emphasized a necessary return to core values. He challenged students to reflect on their personal and professional values, ensuring they are in line.
“Questions of confidence (in banks) have been supplanted by questions of conduct. … Virtue cannot be regulated. Even the strongest supervision cannot guarantee good conduct,” he said. “Essential will be the rediscovery of core values and, ultimately, this is a question of individual responsibility.”
More than jobs, savings and homes, trust in banking systems was a casualty following the worst global recession since the Great Depression, Carney noted, explaining it was the mismanagement of banks and, on occasion, the “malfeasance of their employees” that delivered the fatal blow.
“This has deepened the cost of the crisis and is still straining the pace of recovery,” he added, mentioning foreign banks charged with criminal activity, the manipulation of financial benchmarks, money laundering and unauthorized use of client funds.
Such abuses have raised fundamental doubts about the core values of banking institutions, and while the reforms agreed upon by the G20 have garnered progress in the industry, they are not enough. This is why for Ivey graduates, looking to work in the finance sector, it will come down to more than just simply mastering company evaluation and accounting.
Living the right values will be their most important challenge, Carney stressed.
“No compensation package can be devised. To think that compensation arrangements can ensure virtue is to miss the point entirely. Integrity cannot be legislated and it certainly cannot be bought – it must come from within,” he said.
“Purely financial compensation ignores the non-pecuniary rewards to employment, such as the satisfaction received from helping a client or colleague succeed. When bankers become detatched from their end users, their only reward is money, which is generally insufficient to guide socially feasible behaviour.”
A top-down approach is not the answer either. So to support long-term prosperity, financial institutions and their employees alike need to retain core values in both personal and professional lives, Carney continued.
“When we compartmentalize, we divide our lives into separate realms, each with its own set of rules – home is distinct from work, ethics from law. To restore trust in the global financial system, institutions need to rediscover their values,” he said, adding this was the conclusion of research done at Ivey, led by its Dean, Carol Stephenson.
“To move to a world that once again values the future, bankers need to see themselves as custodians of their institutions, improving them before passing them along. The time for remorse is far from over. It will be up to you, who go into the industry. Will your professional values be different from your personal ones? What will you leave for those who come after you?”
Previous lectures in the series have come from Clerk of the Privy Council Kevin Lynch; Bank of Canada Governor David Dodge; former Deputy Prime Minister John Manley; Home Depot Canada President Annette Verschuren; former Finance Minister and Canadian ambassador to the United States Michael Wilson; and d’Aquino, who delivered the inaugural lecture in 2007.
Carney will be leaving his post as Canada’s bank governor in July, taking up the same role in the United Kingdom. He will be the first foreigner to serve as the Governor of the Bank of England.
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