Lending credence to this view, in the years since the crisis, the industry has been plagued by a series of high-profile conduct scandals, despite dramatically increased budgets for governance, risk and compliance personnel and vastly expanded surveillance and monitoring systems.
The uncovering of the LIBOR-rigging scandal in 2012 shook regulators and policymakers, and reinforced the perception that banks had not learned the lessons of the financial crisis. Then, on the heels of LIBOR, came the foreign exchange rigging scandal. That bank leadership had failed to halt such market manipulation, even following the penalties meted out in the wake of the LIBOR scandal, enflamed regulators further. “The LIBOR and FX events made clear that serious ethical and behavioral problems had persisted in the industry,” said Dudley at the NY Fed. “I was particularly struck by how the manipulation of foreign exchange rates occurred even after the LIBOR fixing was widely known."1
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