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Fed Official Warns Banks: Fix Culture Problem or be Downsized

Joe Mont | October 21, 2014

Two stern warnings regarding bank compliance efforts were issued by two Federal Reserve officials this week. The message from William Dudley, president of the Federal Reserve Bank of New York: if financial institutions don’t fix their culture problem, they risk being downsized and broken-apart. Meanwhile, Fed Governor Daniel Tarullo blasted banks that take a “check-the-box” approach to compliance.

Dudley, speaking at a conference on “Reforming Culture and Behavior in the Financial Services Industry” held by the Federal Reserve, said senior leadership and boards must take an active role in improving a firm’s culture or they risk having regulators step in to break them apart into more manageable entities, he said.

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