Aussie banks run by psychos

Honestly, our regulators are the biggest pack of no-hopers, via the AFR:

The psychologist inserted by the corporate regulator into boardroom discussions of more than 20 blue-chip companies including Qantas, Woolworths and AMP warns that Australia’s financial sector culture is broken.

Elizabeth Arzadon, the regulator’s psychologist of choice, also warns that resistance by boards to public criticism is a mark of bad culture, staff surveys are not enough and that leaders are dragging their feet on culture.

OK, so I’ve taken a little license on what this means. But reading between the lines that is the import.

This should shock nobody. Most large organisations are at risk occupation from psychopaths. Especially so when the job comes with huge power, dough and an ubermensch mythos that will attract every narcissist.

This phenomenon was long ago explored by Paul Babiak in the seminal study Snakes in Suits:

The text covers the nature of psychopaths in the context of employment and purports to explain: how psychopaths manipulate their way into work and get promoted, the effects of their presence on colleagues and corporations, and the superficial similarities (and fundamental differences) between leadership skills and psychopathic traits. The work is interlaced with fictional narratives illustrating how the factual content applies to real-life situations. Characteristics of manipulators are described as shifting to meet stereotypical gender expectations: a female psychopath might make full use of the passive, warm, nurturing, and dependent sex-role stereotype in order to get what she wants out of others and a male psychopath might use a macho image, intimidation, and aggression to achieve satisfaction of his desires. The authors posit that around 1% of senior positions in business are psychopaths.

The authors describe a “five phase model” of how a typical workplace psychopath climbs to and maintains power: entry, assessment, manipulation, confrontation, and ascension. In the entry stage, the psychopath will use highly developed social skills and charm to obtain employment into an organisation. At this stage it will be difficult to spot anything which is indicative of psychopathic behaviour, and as a new employee you might perceive the psychopath to be helpful and even benevolent. Once on to the assessment stage, the psychopath will weigh you up according to your usefulness, and you could be recognised as either a pawn (who has some informal influence and will be easily manipulated) or a patron (who has formal power and will be used by the psychopath to protect against attacks).

Manipulation involves the psychopath creating a scenario of “psychopathic fiction” where positive information about themselves and negative disinformation about others will be created, where your role as a part of a network of pawns or patrons will be utilised and you will be groomed into accepting the psychopath’s agenda. Once on to the confrontation stage, the psychopath will use techniques of character assassination to maintain their agenda, and you will be either discarded as a pawn or used as a patron. Finally, in the ascension stage, the role of the subject as a patron in the psychopath’s quest for power will be discarded, and the psychopath will take for himself/herself a position of power and prestige from anyone who once supported them.

The Hayne Royal Commission was clear evidence of these dynamics at work in our banks.

The answer is not to send in psychologists to put a few executives on the couch. It is to apply regulatory processes that automatically weeds psychos out. That is, you create a regime of big, dumb rules for banking that means the psychos are boxed and their mismanagement is held to account. Before long they will no longer be interested in a banking career at all.

Such rules include very high capital ratios and clear punishment for reliance upon any kind of public support. There is nothing a psycho thrives on more than moral hazard and the cure is same as it is for vampires: sunlight.

Latest posts by David Llewellyn-Smith (see all)


  1. Whenever you mention big dumb rules, I’ll be here.

    Bloody Mary, Bloody Mary, Bloody Mary.

    Or is it Betelgeuse, Betelgeuse, Betelgeuse!?!

  2. It has been clear that the “solution” is simple, but not easy to implement, solely because there is no political will to do so.

  3. You can’t get rid of psychos; they are just a more extreme version of a core personality type – the “Doer”, the “Choleric”, etc.

    They are highly adaptable to regulatory and social settings, a finely tuned machine for getting their way; their are driven by what they want, and using resources to get their way, particularly people. They are fast, aggressive and powerful.

    Their nemesis is the Thinker, who must call them out, point out and change the Doer’s self-serving narrative: “It is not as you say.” The Doer must be wrapped up in red tape, and slowed down. But they masters at flanking the tape, at finding loopholes and technicalities. Again, the Thinker must pro-actively anticipate and head-off the Doer.

    So very interesting.

    • The above article and wiki links look like little more than a rehash of Stalin’s recipe for his rise to power.

      • reusachtigeMEMBER

        Exactly. Psychos are more likely to be commie dictators (the bad guys like Emo Plumbing) than our free market captains of industry (the good guys like myself)!

      • Yes, most tyrants have high-Doer personalities – even in personal relationships.

        Most politicians are also Doers.

        They are even “better” / “worse” (depending on how you view things), when they also have a good dose of Thinker – meaning that they are fast, aggressive, highly ambitious and driven, highly exploitative, AND quite intelligent, rationalistic…

      • ErmingtonPlumbingMEMBER

        I’m not a Commie Reusa.
        I’m a believer in Social Democracy, with an emphasis on the Democray part.

        Democracy is something your mob (Global corporate Aristocracats & Plutocrats) have spent 3 decades subverting, circumventing and eroding away.
        Not bloody left Wingers!

        Someone on Twitter sent me this link,…Ive only listened to the first 20mins,…but this RW Aussie bloke in 1991 is trying to blame “the new world order” on socialist!
        Fken idiot!

    • +++

      “It is to apply regulatory processes that automatically weeds psychos out.”

      You would weed out half the good surgeons in Australia if you did the same.

      Regulation of the psycho horse after it has bolted is not the answer. It bolted once government set corporations free of a social obligation and permitted a concentration of power to seek profit in the delivery of public services. Psychos will always run big tobacco, gambling, fashion and much of the discretionary economy that runs from marketing and fraud. However, essential services such as food, shelter, health, environment and the custodianship of money etc must be regulated by independent government agencies able to hand out massive penalties.

      If psychopaths produces more risk for a corporation they will go out of fashion very quickly.

      The problem is that neoliberalism turned them loose on society in the same way that the armed forces uses them during hot wars. Rediscovering the role of government in protecting society from corporate greed and re-establishing a culture of public service is needed to address this. Neither the ALP or LNP have the ideological conviction to do so.

      • ErmingtonPlumbingMEMBER

        Traditional Labor party ideology can address these issues.
        But unfortunately its leadership has been beguiled by the bright lights, trinkets and baubles of Neoliberalism and Mass market consumerism and it has corrupted them.
        Only rank and file, democratic control of ALL policy formation can reform them and break this disfunction in our democratic system.

      • #ErmingtonPlumbing

        The problem is that the ALP’s neoliberal and service industry power base will resist change. A warts and all analysis of their folly would reveal that their ‘reforms’ began the long decline of Australian egalitarianism. Any cool headed analysis of this history requires the upending of the myths of Hawke and Keating who did as much harm as good in the long run; neither of them understood the role that science, technology and education could have had in transforming Australia to a very different long-term future. They did not believe in it – none of them truly do to this day.

        I don’t think the ALP will be willing to reform until it looses the next election – and it will as they continue to anoint the apparatchiks (Jim Chalmers) who have never had a real job. This is the professional politician who studied politics for God’s sake – is this a joke? Because it kind of says it all.

        Presently we need engineers, scientists, technologists, inventors, technicians and risk taking investors who know how to get things done to push this class of intellectual anaesthetics aside. Unfortunately the ALP are bunkered, rusted on and won’t give an inch because to do so is to admit that they are the problem. Amusingly, while the ALP likes to point out that Howard was stuck in the 50s, the ALP are bogged down in the 80s clutching their reform legend straws and an agenda that has gradually turned back on us all like a rabid neoliberal dog. ALP politics is no place that the people we need want to be – go ask Barry Jones – as such people value reason, evidence and truth.

        If someone like Warren or Sanders takes the US presidency then the ALP will be forced to reform or wither as an anachronistic monument to neoliberalism. A slim hope perhaps, but if the US emerged as a real social democracy we would follow.

  4. reusachtigeMEMBER

    What a load of rubbish. We live in a society where success, power and profit is at the core of how we operate. We want these people as they are the strongest and have demonstrated that they will destroy anything that gets in their way, which means business success will prevail. Good on them. It’s a winning attitude. And I exhibit all those traits and I’m far from a psycho. If you try and discredit me on this I’ll destroy you and your family!

  5. Before long they will no longer be interested in a banking career at all.
    Yep Probably correct, but where would these Psycho’s go if banking were made unsuitable?
    It would be naive in the extreme to imagine that these narcissists would simply disappear, that’s not in their nature.
    I suspect many would make a beeline for Politics…sounds like one of these situations where you need to be careful what you wish for. Alternatively we could introduce some sort of Social Credit Score and invent rules and codes of conduct and behavior that specifically punish these Psycho’s …hmm haven’t I recently read on MB derogatory comments about just such a scheme. Again be careful what you ask for.

    • We’ll soon have the Zuck with his crypto and banking licence so prepared to be out Psychoed ….

      • After they are charged and convicted of what exactly?
        Frankly I’d rather have China’s Social credit score overreach than Australian Political/Legal over reach.
        As you have pointed out in the past the real problem is Moral Hazard, banks know they’ll be bailed out so they willingly take on financial risks that they would otherwise be penalized for. The whole financial sector knows it’s not the Bank but rather the Australian public that is guaranteeing these loans and acts accordingly and naturally the Prime Minster for Real Estate stands on the side lines and cheers.

        It’s Fubar…Total Fubar but lets not compound the insanity by arbitrarily imprisoning bankers.

      • Banks banks banks infinitum …. sigh … capital was bailed out …. now some are scared of a capital strike [tm] … chortle ….

  6. Even StevenMEMBER

    You want banks to hold very high capital ratios? At a time where the economy is already slowing dramatically? I didn’t realise how much you wanted a recession. Fair enough. Bring it on.

  7. Jumping jack flash

    The entire debt-based economy we have now is testament to how good bankers are at getting their own way.

    Ever so gradually the changes were made to streamline the debt creation process, ignore all those annoying types of risk that couldn’t be easily controlled and contained, rename debt as 1000 different and exciting products for people to own, persuade governments to offer special treatment and incentives for debt transactions, and finally, accept control over the entire economy from the governments, because by that time the banks’ debt was so saturated throughout the economy that interest rates could finally control economic activity. Debt was used for the majority of transactions instead of actual money.

    Has it gone on too long for there to be any solution? Does anyone really want a solution?

  8. Australian Corporate Culture is not the only one that is broken.
    Vibrant Culturally Diversified Australia is broken will only get worse.
    We are creating a society/culture where the only way to survive it is to stop caring about it.
    We are becoming an increasingly low trust society where everyone is in it for themselves.

  9. mikejohnpMEMBER

    It is well written that the general population has at least 1% psychopaths. It stands to reason the % is much, much higher for corporate senior positions, since they gravitate there.
    I’ve read estimates of 25-40% of senior positions are filled by people with socio or psychopathic personality disorders.