NEW YORK — Banks need to continue to monitor the way they reward employees to ensure they promote good conduct, one of the country's top financial regulators said on Thursday.
"To put it very simply, incentives drive behaviour, and behaviour establishes the social norms that drive culture," said William Dudley, president of the Federal Reserve Bank of New York, who was speaking at a conference hosted by his Fed bank titled "Reforming Culture and Behavior in the Financial Services Industry."
"If the incentives are wrong and accountability is weak, we will get bad behaviour and cultures."
The comment comes amid a scandal at Wells Fargo & Co in which the bank agreed to pay a $185 million settlement over its staff opening as many as two million accounts without customers' knowledge.
Wells Fargo employees have described a pressure-cooker atmosphere in which they risked losing their jobs if they did not hit unrealistic sales targets.
They say this pressure created a culture at Wells Fargo which led to widespread fraud in the opening of fake accounts
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