Fix bank culture or face being broken up, says US Fed Reserve

New York

BANKS must change the way employees are compensated and take other steps to fix a corporate culture that encourages misdeeds or face being broken up, said William Dudley, president of the Federal Reserve Bank of New York.

If bad behaviour persists, "the inevitable conclusion will be reached that your firms are too big and complex to manage effectively", he told industry leaders in a speech at the New York Fed. "In that case, financial stability concerns would dictate that your firms need to be dramatically downsized and simplified so they can be managed effectively."