In David Enrich’s The Spider Network, an engaging chronicle of the London Interbank Offered Rate (LIBOR) interest rate-fixing scandal, employees of financial companies such as UBS, Citicorp, Deutsche Bank, HSBC, Rabobank, RBS, Barclays, and several brokerage firms conspire to move LIBOR and its offshoots by small amounts, for the sole purpose of benefiting derivatives traders who profited from the moves. The book implicitly raises a key question for the financial industry, indeed for the entirety of capitalism: Is there an ethical code that must be followed, apart from and beyond the requirements of the law; or is all that is necessary to be ethical merely to adhere to the law? The latter, many would agree, is a very dangerous idea – and therein lies the inescapable dilemma and challenge for capitalism.

In Enrich’s book, attorneys for several of those accused of manipulating LIBOR make the following argument in their clients’ defense and against the prosecution’s case:

The crux of their defense was that the world the prosecution was describing to the jury – a world in which everyone was expected to play by the rules, where transparency mattered, where honesty and fair dealing were sacrosanct – was a fantasy. The financial industry was not a polite, rules-bound, ethical place; it was a no-holds-barred culture where brokers were actively encouraged to manipulate and lie to their clients.

Anyone familiar with the financial industry will know that at many, perhaps most financial institutions, indeed the most profitable ones, the no-holds-barred description of the culture fits better.

At firms like Goldman Sachs, products are designed with the sole purpose of increasing the information asymmetry between product sellers and clients – clients who were sometimes referred to as Muppets, that is, patsies, by Goldman Sachs employees. And the product designers and their sellers are richly rewarded for putting one over on their clients.

At Wells Fargo, pressure on employees to cross-sell new accounts to existing customers was so great that a subculture of employees who added new accounts and account features without customers’ knowledge – and charged them for it – became widespread and well-known within the bank.

At SAC, the hedge fund owned by Stephen A. Cohen, employees of which were convicted of insider trading, pressure to obtain special information about listed companies was so great that one employee could say that “he thought that trafficking in corporate secrets was part of his job description at SAC.”