Firms could decide to hire even if they know about a candidate’s history. Since last year, several traders involved in regulators’ investigations of foreign-exchange and Libor markets have been hired by non-bank financial firms.

A registry could be helpful “at the margins,” said Robert Hockett, a law professor at Cornell University in Ithaca, New York. “‘There’s a kind of implicit shaming effect,” he said. “Some people might have qualms about the prospect of being put on the list and rein in their behavior.”

Still, many bankers and traders are comfortable “pushing the envelope” and will continue to do so even with a database, said Hockett, who has worked as a part-time consultant to the New York Fed.

Quiet Concern

While the summary of the New York Fed’s culture conference said that “no participant raised an objection to the registry,” some executives, when outside the earshot of regulators, express concerns that it could trample the rights of individuals. One attendee, who asked not to be identified at the risk of offending regulators, said a registry would be terrifying for bankers if strict due process and privacy standards aren’t met.

Spokesmen from the Securities Industry and Financial Markets Association, Wall Street’s biggest lobbying group, and the American Bankers Association, which represents lenders of all sizes, declined to comment on the idea.

Near the end of an October 2014 speech on improving the culture of the financial services industry, Dudley mentioned the idea and compared it to a lender’s ability to check a borrower’s credit score. “It would be helpful if financial firms, prior to making a hiring decision, could look up a candidate’s ‘ethics and compliance score’ that reflects the individual’s past performance at other financial firms,” he said.

Restricted Access

Dudley noted that a similar system exists at regulated broker-dealers, which must file forms when they hire or dismiss licensed brokers. Finra, Wall Street’s self-regulator, runs a public database that includes violations, regulatory actions and complaints against brokers to help individual investors. A banker registry wouldn’t be public, and access would be restricted to hiring managers and some top executives.

Regulators say they’re disturbed that while bankers and traders move frequently between firms, their records don’t. Manipulation of Libor involved collusion among employees at different firms, some of whom knew each other at their previous jobs. Dudley noted that “often allegiance to an external network of traders has been more important than the ties the trader has to his or her particular employer.”

Dudley has been on the defensive amid criticism by lawmakers, including Senator Elizabeth Warren, who say the New York Fed has been too deferential to the Wall Street banks it oversees. During a congressional hearing last year, Warren told him that if he couldn’t fix the “cultural problem” at the reserve bank, “we need to get someone who will.”

Though many of the specifics of a database must still be addressed, that’s not the biggest obstacle, according to Sullivan & Cromwell’s Cohen.

“The devil is truly not in the details,” he said. “The devil is in having the will to do it in the first place. If you have that, you can solve the detail problems.”

First « 1 2 3 » Next