A similar leadership vacuum exists in Europe, where prominent industry defender Josef Ackermann retired in May as CEO of Deutsche Bank AG and chairman of the Institute of International Finance, a global lobbying group. Barclays CEO Diamond, who was as outspoken on behalf of banks in London as Dimon was in Washington, resigned in July after U.K. authorities fined his firm a record 290 million pounds ($456 million) for rigging the benchmark London interbank offered rate, or Libor.
Gulliver's Travails
Stuart Gulliver, 53, CEO of HSBC Holdings Plc, is hamstrung by allegations in a U.S. Senate report last month accusing Europe's largest bank of laundering funds for the Taliban, Mexican drug cartels and international criminals. The London- based bank said July 31 that it set aside $700 million to cover potential fines.
Standard Chartered CEO Sands, whose London-based bank has posted eight years of annual record earnings, reached a $340 million settlement last week in a New York probe related to charges that the lender helped sanctioned nations, including Iran, funnel money through the U.S.
It's no wonder that public confidence has sunk to an all- time low with so many financial scandals and so many of them self-inflicted, said Ann Buchholtz, a professor of leadership and ethics at Rutgers University in New Jersey.
"This is a case of heroes doing more harm than good," Buchholtz said. Investors tend to romanticize corporate leaders and attribute success within an organization to them when the drivers of that performance are far more complex, she said. "We tend to make them bulletproof, looking the other way when we see signs of problems. We don't believe ill of a leader until the evidence is overwhelming."
Losing Legitimacy
Wall Street has had no shortage of leaders, beginning with John Pierpont Morgan, who founded the company that bears his name and played a prominent role in halting the banking panic of 1907. Walter Wriston, who ran Citigroup predecessor Citibank NA from 1970 to 1984 and is credited with introducing automated teller machines, helped New York City avoid bankruptcy in the 1970s with a financing plan he devised with another industry leader at the time, Felix Rohatyn at Lazard Freres & Co.
The dearth of leadership on Wall Street now is "really problematic," said Harvard's Khurana.
"Businesses and their leaders are no longer seen as trustworthy," he said. "When an institution or industry loses its legitimacy, it loses the benefit of the doubt."