Design of Weaving Sections

Institutional Corruption: A Fiduciary Theory

“…Salter identified Citigroup as institutionally corrupt, in part because its economy of influence-including compensation schemes that tied bonuses to short-term stock performance-led the company to engage in deceptive marketing practices. 93 Citigroup created a "mind-numbingly complex, high-risk investment fund" comprised of credit default swaps that were tied to the fortunes of holders of subprime residential mortgage debt. 94 Citigroup's marketing materials to commercial customers represented the firm's role as that of neutral go-between, when in fact it had "exercised significant influence" over the composition of the fund, in which it took an undisclosed short position.…”

“…113 Salter argues that firms are institutionally corrupt insofar as they engage in what he calls "the rule-making game"-the activity of influencing legislation in ways that undermine the law's suitability for achieving legitimate state objectives. 114 For example, Salter reports that the financial industry successfully lobbied for a variety of technical exemptions to the so-called Volcker rule, a provision in the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010, which was intended to prohibit proprietary trading by FDIC-insured banks. 115 Such gaming, Salter writes, "inflicts a social injury when it subverts legislative intent and weakens the social contract between the capitalist system and the citizenry."…”