Could a Hippocratic oath for bankers make the financial industry's titans behave?
A U.K.-based think tank believes so. On Tuesday, ResPublica, an independent, non-partisan organization based in London, released a report titled "Virtuous Banking," which offered suggestions for reforming the banking industry. Among its recommendations is a proposal to have financiers swear by what it calls the "Banker's Oath," akin to doctors' Hippocratic oath.
I will confront profligacy and impropriety wherever I encounter it, reads part of the suggested covenant. If I do not violate this oath, may I benefit from the prosperity that comes from serving customers well, reads another.
The concept — bankers swearing like Boy Scouts to be good — made for an easy target. The publication Management Today created its own satirical version: I will not try to manipulate rates, even when others are begging me to; I will leave this operation to be performed by central banks. In a letter to The Independent, a retired financial services compliance officer said the idea "made me wince." And The Guardian's Stuart Heritage was blunt about its chance at success: "I can solemnly swear I'll eat my own legs if it works."
The idea may have seemed preposterous to some, but it's hardly new: Government officials to industry insiders to even poets have proposed something similar. Back in 2010, a Scotland fund manager suggested that financiers take an oath "to treat my clients at all times as I would wish to be treated." Starting this year, Dutch banking employees will have to honor a pledge and will be subject to fines, blacklists or suspensions if they fail to uphold it. I swear that I will do my utmost to preserve and enhance confidence in the financial-services industry, the code reads. So help me God. (The God part is optional.)
And back here in the United States, a Boulder, Colo.-based writer and poet, Markus Stobbs, bought the Web address www.bankersoath.com in 2012 and penned his own version. I will keep myself from intentional ill-doing / mindful of the seduction of wealth to cloud good judgment, part of his code reads. Stobbs says he passed out hundreds of copies outside office buildings on Wall Street back in 2012, with reactions ranging from total disinterest to one banker who was so intrigued he walked back from the subway to talk to Stobbs for more than an hour. He admits his little quest hasn't gotten much traction. "I never really saw Web site traffic," he says. "But I just keep plunking away."
Stobbs' effort may be obscure, but the concept of a professional oath for business managers — if not bankers — has gotten some real attention in America in recent years. In a 2008 Harvard Business Review article, HBS professors Rakesh Khurana and Nitin Nohria (now the school's dean) called for a Hippocratic oath for managers, a concept Khurana had outlined in his 2007 book, From Higher Aims to Hired Hands. In the article, they argued that when business schools were first launched a century ago, the purpose was to ensure that corporations "would be run in the interests of society by turning the occupation of management into a bona fide profession, with the educational underpinning, certifications, and code of conduct that go along with it."
Since that never really happened, they said, management could benefit by becoming more like a profession such as medicine or law. Nohria and Khurana went on to be founding board members of the Oath Project, an organization that seeks to professionalize the practice of management. Its "Hippocratic oath for business" has been integrated in some form in at least 78 business schools and more than 52,000 people have signed the oath.
Yet convincing students of the value of such a code could be a lot different than selling it to bankers with dollar signs in their eyes. "My guess is that if hot-shot-twenty-something-fresh-faced-banking-recruits were asked to swear an ethics 'oath', it would be taken about as seriously as the doorman wishing they 'have a nice day,' " John Dobson, a professor of finance at California Polytechnic State University, wrote in an email to me.
In other words: An oath will hardly be effective on its own. Regulations have to work. Financial rewards must be overhauled. And in some cases, the culture and leadership of organizations will need to change. Robert Steven Kaplan, a Harvard Business School professor and former Goldman Sachs executive, warns that an oath won't do much at a firm where people are afraid to raise tough issues or where the culture isn't consistent with the content of the pledge. "The oath by itself won't do the job of leadership or change a dysfunctional culture. Leaders have to do that."
Indeed, the ResPublica paper proposes the oath as just one part of the answer. Its ten recommendations include not only that bankers swear by an oath, but that the industry defines an overarching purpose for banking, implements tougher shareholder fiduciary duties, improves diversity and competes more on customer satisfaction. Whether or not that prescription, or the notion of an oath itself, truly helps to reform the industry, at the very least it seems likely to do no harm.