In an article in The Atlantic, William Cohan looks at a study conducted by three economists at the University of Zurich.  The study finds when bankers are reminded they are bankers and there is a financial incentive to cheat behind a veil of opacity, bankers will cheat.

That bankers will cheat behind a veil of opacity is well documented.  The latest example of this being Deutsche Bank and its rigging various benchmark interest rates.  As a representative of the UK’s Financial Conduct Authority said,

This case stands out for the seriousness and duration of the breaches by Deutsche Bank – something reflected in the size of today’s fine. One division at Deutsche Bank had a culture of generating profits without proper regard to the integrity of the market. This wasn’t limited to a few individuals but, on certain desks, it appeared deeply ingrained,…

“Deutsche Bank’s failings were compounded by them repeatedly misleading us. The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls…

As a spokesperson for US Department of Justice observed,

Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system… not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere.

One of the benefits of the Transparency Label Initiative™ is it puts an end to this type of behavior.  It ends this behavior by bringing transparency to the banks.

Sunlight is the best disinfectant.  Does anyone think the bankers would have cheated in the study had there been observers?