Are banks simply hardwired to behave amorally?
IS THERE something wrong with the type of person attracted to financial services? Many people think the answer is yes.
What happened at Anglo is not unique. Emails and texts published after a recent scandal in London revealed a very similar machismo at work.
In a lengthy report on the banking crisis in the UK published last week, a parliamentary commission reported in thousands of pages on the low standards that prevailed in British banks. The report laments "the striking limitation on the sense of personal responsibility and accountability of the leaders within the industry for the widespread failings and abuses over which they presided".
As the financial crisis grinds on, an increasing number of behavioural psychologists and neuroscientists agree, but they believe the explanation for the crash lies between our ears.
Gregory Berns, a professor of neuroeconomics at Emory University in Atlanta, has used brain scanning technologies to decode the brain's decision-making systems. He concludes that financial services types became addicted to the pleasure of making money while increasingly losing touch with the risks they take.
"It is an insidious process, you are not aware of it. You are addicted to returns, you are addicted to risk, you are addicted to cocaine – it's all the same as far the brain goes," he said after studying US bankers.
His research suggests the brain has no mechanism for being satisfied. This means brains adjust and keep accepting higher risk. Anybody who doubts this just has to look at the ballooning loan book at Anglo Irish in the 10 years before the crash.
Another man to have looked at what happens to people inside the financial services sector is Wall Street trader turned Cambridge University neuroscientist John Coates. Dr Coates suggests bankers covet multi-million pound bonuses for the status they convey as much as the money, fuelling a culture of one-upmanship among financiers that was also on vivid display in the Anglo tapes. Banks and other financial organisations are run by people who spend their days trying to prove their value.
The banking problem is many things but one of the biggest issues is having too many over-confident people in the same room who love getting the better of others and have no ability to measure risk anymore.
What can we do about all this? How can the culture of financial services be changed?
Some, including Dr Coates, argue that the appointment of more women and older men will do the trick.
The UK parliamentary report wants a new regime of "senior persons" to place responsibility for various aspects of banks' conduct with specific executives and directors.
It also wants a licensing regime for any bank staff in positions where they could "seriously harm the bank, its reputation or its customers".
Other solutions suggest ending the competition for status by teaching students differently in business school and creating clearer career structures, where job titles rather than money send signals about rank.
People who are against government regulation (including most bankers) argue that governments are no better at figuring out what is risky.
James Montier, a strategist at Societe Generale in London and an expert in behavioural finance, disagrees.
He says that people believe they will act in one way when contemplating an emergency but then act in quite a different one in the heat of the moment.
We all need somebody watching over us, Mr Montier argues.
It is difficult to disagree. We all labour under illusions about how robust our ethics are. Bankers, with their brains hardwired for risk and money, appear to labour under bigger illusions and with more serious consequences than most of us.
It is time for a law that makes reckless banking a criminal offence and new rules to ensure that the financial services sector takes action to ensure that bankers ultimately report to people who have to pick up the pieces when things go wrong.