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The New York Fed’s Work on Financial Institution Culture James Bergin Deputy General Counsel and Senior Vice President Federal Reserve Bank of New York November 14, 2019 1 Agenda Why organizational culture matters The nature of the culture problem The New York Fed’s culture initiative 2 Disclaimer Any errors are the sole responsibility of the author, and any views expressed are those of the author only, and do not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. 3 Why Organizational Culture Matters Financial system needs to promote the well-being of the real economy. We want the financial system to operate in a way that is safe, fair and transparent. Misconduct causes harm that can impede our ability to achieve our mission. 4 The Nature of the Culture Problem An issue that institutions themselves need to solve. Rules and enforcement set the legal boundaries of behavior. But regulators cannot prescribe one model of organizational culture that will stop firms from crossing those boundaries. 5 The Nature of the Culture Problem Individuals need to exercise ethical judgment when interpreting the rules that apply to them – “filling in the gaps.” Culture is a “complex” issue that demands multiple tools and approaches, and a constantly evolving strategy. 6 The New York Fed’s Culture Initiative Connect, convene, catalyze. Culture conferences Roundtable for Governance Effectiveness Education and Industry Forum on Financial Services Culture Industry best practices and codes 7 Questions? for internal use only 8