More than five years after a global economic calamity brought on by finance industry malfeasance and greed, the Dutch are taking a novel approach to improving banking ethics: an oath of office.
Starting in January, all banking industry employees in the Netherlands must “swear that I will do my utmost to preserve and enhance confidence in the financial-services industry” and to put the interests of both clients and society first, according to Bloomberg. Swearers can choose between concluding the vow by saying “so help me God” or with a non-religious affirmation.
The oath is coupled with a new regime of both criminal and professional punishments should they violate the industry’s legally binding code of ethics. The details of that new system of punishments and evaluations “remain unclear,” Bloomberg reports, but the idea is to replicate the sorts of self-policing professional boards that have long been standard for medical doctors.
The Netherlands will find out in time whether a legally enforceable oath of honor is an effective way of changing financial services employees’ behavior, but it isn’t hard to see why the idea appeals to voters and lawmakers. Decades of deregulation in the U.S. and elsewhere helped disrupt the traditional relationship between the finance industry and the real economy of making and selling actual things. The previous arrangement, where financial industry profits were directly linked to the health of the broader economy, gave way sometime over the past few decades to a new arrangement where financial firms suck $635 billion per year out of the American economy. Deregulation made inequality worse, concentrated the finance industry’s power into just a few firms, and gave rise to price rigging that harms consumers in a wide variety of different trading markets.
Despite the financial blowout of 2008, little has changed about the basically predatory new relationship between finance and the working world. Surveys tell of “a ticking economic time bomb” in Wall Street ethics. Megabank executives earn massive paydays by evading real consequences for their companies’ roles in causing the financial crisis. The industry’s profits have bounced back while working America has not. Several finance executives directly implicated in the crisis walked away with their fortunes intact.
The U.S. government’s attempts to police the industry have been anemic and efforts to put new “cops on the beat” on Wall Street get undermined by lobbyists and lawmakers alike. Even when the feds declare victory in specific cases their claims often prove exaggerated and their victories often prove hollow. Forcing bankers to promise to behave can’t fix those failures, but it probably can’t hurt either.