This week brings yet another revelation of misconduct by a major bank, with a top New York State regulator reporting that the British bank, Standard Chartered, circumvented laws aimed at stopping Iran from using the U.S. financial system and possibly advancing its nuclear program.
These new findings will come as no surprise to anyone who read the report released last month about HSBC by a Senate subcommittee, which showed how that bank had put itself at the service of Mexican drug cartels and terrorist groups.
In both cases, bank employees were instructed on ways to mask financial transactions that didn't comply with U.S. laws -- suggesting that the wrongdoing was intentional, systematic, and sanctioned by top bank executives.
It's one thing, and unfortunately routine, for banks to exploit or hurt consumers in illegal ways to boost their profits. Somehow, though, it seems far more shocking that banks would put profits above national security -- literally doing business with the enemy to make a few extra bucks. (Britain, where Standard Chartered is based, is part of the same sanctions regime against Iran.)
Yet, on reflection, why should this be shocking? One thing we have learned in this age of extreme capitalism is that market forces treat no value as sacred. The relentless drive for efficiency, profits, and a competitive edge bulldozes everything in its way. As I detailed in my book, The Moral Center, nearly every value that Americans care about is under attack by market forces and actors: work, family, empathy, community, and personal responsibility. In addition, as my colleague Mijin Cha details here every week, markets are also undermining the value of environmental stewardship.
Given all this, it's no surprise that market actors would also subvert the value of common defense -- the idea that we must work together to protect ourselves from foreign threats. Whenever the rewards are big enough, markets encourage defection from shared societal obligations and incentivize the naked pursuit of self interest.
This isn't the fault of capitalism, which is an amoral machine designed to maximize wealth creation. It is the fault of our democracy, which has failed to regulate capitalism so that it is compatible with widely shared human values.
The latest scandal is thus yet another reminder of what is at stake in seemingly arcane battles over regulation: Whether the market controls us or we control it.