Culture Club: Regulating Wall Street’s mindset

Starling Team
Starling mentioned in an article by Jacob Schlesinger

Richard Ketchum, chairman of the Financial Industry Regulatory Authority, or Finra. SHANNON STAPLETON/REUTERS

When a top Wall Street regulator issued its examination priorities for 2016, the checklist included a mix of conventional benchmarks: cybersecurity, antimoneylaundering controls, liquidity and the like. But for the first time, the amorphous notion of supervising “culture” made its list, too. 

“Given the significant role culture plays in how a firm conducts its business, this year…we will formalize our assessment of firm culture to better understand how culture affects a firm’s compliance and risk management practices,” Richard Ketchum, chairman of the Financial Industry Regulatory Authority, Wall Street’s selfregulatory organization, wrote in his letter introducing the plan. 

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Cultural-Prudential Regulation: Micro and macro have company

Starling Team

Since the Financial Crisis, we have seen three distinct waves of regulatory activity in the financial sector. An initial focus was placed on micro-prudential rules targeting individual institutions, such as setting higher capital standards and liquidity levels. This was followed by an emphasis on macro-prudential tools targeting the financial industry, including guidance on lever- aged lending and the countercyclical capital buffer

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Why Women-Led Businesses Outperform Their Peers

Valerie Plame
Valerie Plame Wilson

Over the years, from serving in the CIA to sitting on non-profit boards, I have observed first-hand what the addition of even one woman to a meeting or to a decision-making body can do. Put simply, in very many instances, group dynamics improve markedly. Competition gives way to cooperation. A set of individuals, each vying for attention and dominance, becomes a genuinely collaborative team with shared objectives and mutual trust. And that trust powers the better performance of the group.

The Huffington Post recently published a great article on the topic which we encourage you to read.

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Trouble in the Kinship Economy

Starling Team
By: Stephen Scott

As we move into an election year, the data is clear: the public has lost trust in the government and, indeed, in a majority of our key social institutions.

The history of the last two centuries is one that features the establishment of institutions which served to create the basis of trust among strangers, at scale, as a presumed norm.

I may not know or trust you, nor you me, but if we have a contract and we both have faith in the courts to keep one another honest, we can do business together. But if either or both of us believe the judge to be corrupt…? Then the fabric of our “trust infrastructure” is rent. And when that happens, we return to a norm of dealing only with those whom we know well. Trust at scale is lost, along with the economics of scale.

As the public’s faith in our shared trust infrastructure has eroded over the last decade, we see everywhere a tendency to place trust only in “a person like me.” However, the technologies of the day have enabled us to identify and connect with peers in new ways. It is, therefore, not an accident of history that we’ve witnessed the birth of the “peer to peer” business model quite recently. More on that here.

New, digital platforms are allowing “peers” to self-identify, self-organize, and collaborate at scale, courtesy of the “digital trust infrastructure” established by companies like Airbnb. Let me say a bit more about all of this and then close with a few thoughts about what it implies going forward.

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Obsessing About Rules Won’t Improve Culture

Starling Team
Stephen J. Scott and Jeffrey Kupfer

The topic of culture filled the late-summer headlines following a New York Times piece critical of the “bruising workplace” at Amazon. How workplace environment can drive good or bad behavior has also occupied the bank regulators’ time for a while now. Starling was recently featured in an article by the American Banker where we lay out our approach to how to improve culture in the financial industry.

Here’s the link to the feature article – www.americanbanker.com/bankthink/obsessing-about-rules-wont-improve-culture-1078412-1.html . If you have any comments or would like to learn more about Starling Trust, you can always reach us here.

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