The revelations were painful to watch, Top executives of J.P. Morgan, the nation’s largest bank, testified last Friday before a U.S. Senate committee investigating the firm’s $6 billion losses last year in derivatives trading. Appearing distressed, defensive, even apologetic, one executive after another described failure to uphold standards in the world of high finance. The breaches have damaged the New York bank’s superb reputation for prudent management of financial risks.
Integrity entails upholding correct standards—irrespective of temptations otherwise. When a preeminent firm like Morgan breaches integrity the costs in diminished reputation, trust, and reputation are high. Once damaged reputationsare torment to regain.
The testimony revealed numerous lapses. Playing fast and loose with regulations, the bank failed to furnish regulators mandatory reports of profits and losses. Meanwhile losses were reaching monumental levels. Transparency failed from contradictory phone calls to and from regulatory officials. References flew from a 301 page report accusing Morgan of misleading investors and regulators about risks taken by trading operations in its London offices. Deviations occurred when the bank declined to volunteer profit and loss data until huge losses were already in place. There was testimony that Morgan’s London traders began placing inaccurate prices on their positions as losses grew in early 2012.
More testimony is expected this week.
Though easy to identify, integrity in the abstract if often overlooked. But its true meaning is there for all to see who will see. It radiates an adhesion. It means adherence to a set of standards—convictions—principles—even when inconvenient, difficult, or unprofitable to do so. The standards are those that withstand moral scrutiny and are beneficial to the parties affected.
Albert Camus said, “If you have integrity you don’t even need the rules.”
The cardinal virtue of integrity allows no compromise with the truth. Silence when there is a duty to speak, ill-advised avoidance, the fudge, sidestep, waffle, cover-up—indeed fabrication of any form—are lethal adversaries of Performance with Integrity. Of these verities, J.P. Morgan’s conduct in the escalating “Whale” scandal provides another timely and timeless lesson.