Third and State

Reuters reports on a poll of Wall Street executives on the subject of honesty.

• Reuters — Many Wall Street executives say wrongdoing is necessary:

A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday.

In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.

Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.

Meanwhile, Eduardo Porter in an Economic Scene column worries that corporate corruption may be undermining the most important asset in our economy, trust.

• Eduardo Porter, The New York Times — The Spreading Scourge of Corporate Corruption:

Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?

The misconduct of the financial industry no longer surprises most Americans. Only about one in five has much trust in banks, according to Gallup polls, about half the level in 2007. And it’s not just banks that are frowned upon. Trust in big business overall is declining. Sixty-two percent of Americans believe corruption is widespread across corporate America. According to Transparency International, an anticorruption watchdog, nearly three in four Americans believe that corruption has increased over the last three years.

We should be alarmed that corporate wrongdoing has come to be seen as such a routine occurrence. Capitalism cannot function without trust. As the Nobel laureate Kenneth Arrow observed, “Virtually every commercial transaction has within itself an element of trust.”

For more on the LIBOR scandal, I highly recommend you read Mike Konczal's discussion of the issue.

• Mike Konczal, The Next New Deal — How LIBOR Impacts Financial Models and Why the Scandal Matters

In case you missed it, a dispute between the Mayor of Scranton and the City Council over the budget resulted in city workers not being paid their full salaries.

• Jim Lockwood, The Times-Tribune — Scranton police, fire and DPW unions file motion for contempt against mayor who slashed salaries

Finally, the good people at the Center for Economic and Policy Research (CEPR) use the National Federation of Independent Business's own data to catch them being a little less than shall we say forthright about what matters to small business. 

• Eric Hoyt, CEPR Blog — Poor Sales, Not High Wages, Worry Small Businesses