“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 mastering options pricing, company valuation, or accounting, living the right values will be the most important challenge.”
Carney emphasized core values among a list of “five Cs” that he said were required to rebuild trust.
The other four Cs include capital: requiring banks to hold much more capital than in the past; clarity: enhancing disclosure of a bank’s financial condition and regularly assessing the impact of stress on the system; capitalism: implementing measures to ensure that the troubles of “too big to fail” banks will not severely disrupt the financial system and leave taxpayers to pick up the tab; and finally, connecting with clients.
“In most professions, people see the ’real' impact of their work: teachers witness the growth of their students, farmers that of their crops,” Carney said.
“When bankers become disconnected from their ultimate clients in the real economy, they have no direct view of the impact of their work,” he said, urging bankers not to ignore the consequences of their actions on real people holding mortgages and borrowing to grow their business.
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