Don't Punish Bankers For Taking Measured Risks

June 20, 2013 - UBS trader Tom Hayes leaving Westminster Magistrates Court on Thursday, 20 June 2013. Hayes has been charged with offences of conspiracy to defraud in connection with the investigation by the Serious Fraud Office into the manipulation of Libor, Photo credit: Tolga Akmen/LNP PUBLICATIONxINxGERxSUIxAUTxONLY - ZUMAl94
Tom Hayes, a former UBS trader, was sentenced to 14 years in prison last year in Britain for his role in manipulating Libor global interest rate benchmarks. Mr. Hayes argued that he was just a cog in a bigger machine, which the British court did not dispute.
  • Why it matters

    Why it matters

    Overly draconian sanctions could ultimately weaken rather than strengthen the financial system.

  • Facts


    • In the Netherlands, bankers must take an oath to uphold integrity in the financial sector.
    • In Great Britain, bankers convicted of “reckless misconduct” can be imprisoned for up to seven years.
    • Germany is considering a code of conduct based on a voluntary commitment by the banking industry.
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Eight years after the collapse of Lehman Brothers, the crucial question has still not been answered: How can greedy bankers be prevented from endangering the stability of their own institutions — and ultimately the stability of the entire financial system as well?

Governments and regulators have found quite diverse solutions to this question.

For two years now in the Netherlands, bankers have had to take a sort of Hippocratic Oath: “I swear that I will do everything within my power to increase trust in the financial sector. So help me God.” Whoever breaks this oath is subject to sanctions ranging from training sessions, financial penalties to banishment from the profession for three years.

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