Ethics has been a recurrent news headline from questions of President-elect Trump’s business holdings to the Republican House’s “secret” vote on ethics oversight on Monday.  

I want to share research from a seminar student’s paper on financial regulation and the role of ethics.  She made a compelling argument about the role of ethics to be a gap filler in the regulatory framework.  Financial regulation, as many like Stephen Bainbridge have argued, is reactionary and reminds one of a game of whack-a-mole.  Once the the regulation has been acted to target the specific bad act, that bad act has been jettisoned and new ones undertaken.  Her research brought to my attention something that I find hopeful and uplifting in a mental space where I am hungry for such morsels.

In 2015, in response to a perceived moral failing that contributed to the financial crisis, the Netherlands required all bankers to take an ethics oath.  The oath states: “I swear that I will endeavor to maintain and promote confidence in the financial sector, so help me God.”  The full oath is available here.  Moreover, “by taking and signing this oath, bank employees declare that they agree with the content of the statement, and promise that they will act honorable and will weigh interests properly . . . [by] ‘focusing on clients’ interests.’”  The oath is supported by a code of conduct and disciplinary rules  including fines, suspensions or blacklisting.

Georgia State University College of Law student Tosha Dunn described the role of the oath as follows: 

An oath is thought of as a psychological contract: “the oath has always been the highest form of commitment, and as a social function it creates or strengthens trust between people.”  However, psychological contracts are completely subjective; the meaning attached to the contract is wholly open to the interpretation of the individual involved. Social cues like rituals and public displays may impart meaning or responsibility… the very idea behind the oath is to restore confidence in the Dutch banking system: “we are renewing the way we do business, from the top of the bank to the bottom” and “a violation of the oath becomes more than simply a legally culpable act; it is, in addition, an ethical issue.”

And isn’t that a lovely way to think of an oath and the ability of a social contract to elevate our behavior and promote our higher selves?  

Citations from the student paper and further scholarly discussion are available with the following sources:  Tom Loonen & Mark R. Rutgers, Swearing To Be A Good Banker: Perceptions of The Obligatory Banker’s Oath in the Netherlands, 15 J. Banking & Reg. 1, 3 (2016) & Denise M. Rousseau & Judi McLean Parks, The Contracts of Individuals and Organizations, 15 Research in Org. Behavior 1, 18-19 (1993).

Happy New Year BLPB readers– here’s to an ethical and enlightened 2017.  

-Anne Tucker