The Social Reform of Banking

Recent developments in banking, including high-profile prosecutions for illegal activities, portend further regulatory interventions on both sides of the Atlantic. Yet the structure of much banking regulation requires banks to make good faith determinations of the kinds of risks to which their loans and investments give rise -- determinations that can be, and in some cases have been, manipulated. Rather than evaluating specific regulatory interventions, this Article focuses on the culture within financial institutions themselves, particularly the global entities that are explicitly or implicitly too-big-to-fail, and on approaches to regulation that might affect and be affected by that culture. Our analysis is informed by the perspectives of anthropology, organizational and social psychology, and new governance regulatory theory. Weaving these strands of prior research together, the Article concludes with suggestions for reform, emphasizing structural reforms, accounting reforms (informed by ideas derived from both organizational psychology and transnational private regulation), and other regulatory approaches that might encourage cultural reforms within banking