The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

6 1 Ethical Economy, Economic Ethics, Business Ethics: Foundations of Finance Ethics
The problem of how appropriate norms of an institutional domain can be derived,
once it is deemed to be in need of norm-setting, brings us on to the purpose or the
function of the institutional domain. As long as a domain succeeds in operating without
state norms and laws and mediates the private autonomy of individuals itself, no
state norms are necessary and the legislator should refrain from intervention in the
form of laws. If norms become an irrefutable necessity, however, the question arises
as to which criteria the legislator should base decisions on. Even with a democratic
legislator, this question cannot be answered solely by pointing to the consensus
principle or a simple majority. Even the legislator – parliament, in the case of a
democracy – together with the initiator of law, the executive, must orientate their
legal decision-making towards objective aspects. They cannot make parliamentary
consensus or a parliamentary majority double up as a criterion of legislation without
getting into a loop in which the consensus or the majority is itself justified by
consensus or majority.
In the financial sector as in other social and economic domains, the norms and criteria
of right decision-making and action stem from material appropriateness, from
the nature of the matter at issue – in the case of insider knowledge, for instance, from
the nature of the matter of the fiduciary relationship of shareholders and financial
intermediaries, which excludes financial intermediaries from using insider knowledge
for their own personal enrichment. Or, in the case of banking secrecy, it stems
from the nature of the matter at issue and from the task of the banks, which is to
provide secure and discreet custodianship of value for customers.
The principle that the obligation arises out of the nature and the purpose of the
institutional domain applies both to law and to ethics. For law, the content of the
statute derives from the purpose and the nature of the matter at issue; for ethics, the
ethical personal norm derives from the purpose and the nature of the matter at issue.
The principle that the obligation derives from the nature and purpose of the subject
domain breaks down into three further sub-principles: a duty or an obligation
is derived firstly from the purpose or the teleology of the institution or the operative
domain at issue, secondly from the idea of justice as equality under the law,
and thirdly from the demands of legal certainty. Admittedly, the principle of legal
certainty overlaps more obviously with business law than with economic ethics, but
nevertheless, legal certainty is an element of material appropriateness, and thus it is
an ethical demand as well.
The purpose or purposes of the cultural domains and legal domains of the
financial institutions and financial markets determine the norms that apply within
them.
The idea of justice is the second principle which – particularly as formal justice –
demands that all those who work in a domain should be equal under the law.
The third principle of legal certainty, finally, demands that those working in these
domains can form constant expectations in relation to the stability of the law and the
continuity of judicial rulings. Unless there is some constancy of expectations regarding
legal norms, it is impossible to have a free and efficient economy. If economic
subjects have to assume that the norms underlying the economic domain are constantly
changing, they cannot make long-term plans or form long-term expectations