Some argue that what I have proposed—higher capital requirements and better incentives that reduce the probability of failure combined with a resolution regime that makes the prospect of failure fully credible—are insufficient. Perhaps, this is correct. After all, collectively these enhancements to our current regime may not solve another important problem evident within some large financial institutions—the apparent lack of respect for law, regulation and the public trust. There is evidence of deep-seated cultural and ethical failures at many large financial institutions.
Lack of respect for law eh?
What do you call someone who has a lack of respect for the law? You call him a criminal, right?
What do you call an organization that lacks respect for the law? A continuing criminal enterprise, and there’s a specific law for that problem too — RICO.
Now, Mr. Regulator (and yes, the NY Fed is the primary regulator), would you care to explain why given both your pronouncement of the problem and your possession of the solution that remedy has not been used?
Crickets, I tell you….. crickets.