The author examines whether the actions of financial institutions help people pursue their individual goals and feel at peace with society. He discusses problems revealed by the crisis; reciprocity and aggressive human behavior; regulatory innovation; financial speculation; and instruction in economics, business, and finance. He concludes that finance can be redesigned to fit better with the notion of the “good society.”

First, practitioners can benefit from promoting an ethical culture within their organizations. The author points to the importance of educating students about ethical principles and the existence of professional organizations in finance that promote ethical standards. Second, practitioners need to be aware of the regulatory shift in focus to the avoidance of moral lapses. The author uses as an example the predominantly moralizing language and suggestions on protecting people from dishonesty, subterfuge, and abuse in the Dodd–Frank Act.

Third, practitioners need to remember that financial innovation is necessary for progress. Instruments created by financial innovation are not inherently evil, but dishonest people can abuse them. The author uses the example of collateralized mortgage obligations (CMOs), which are instruments that divide cash flows into tranches of various levels of riskiness, during the financial crisis. CMOs allow for a better matching of investors’ risk–reward preferences, but unscrupulous issuers can abuse the complex nature of these instruments.

Although no amount of regulation can completely deter dishonest behavior, I agree with the author’s stance on the need to promote ethical standards in financial institutions. By failing to instill an ethical culture, the corrupt behavior of some can end up infecting an entire organization.