While couching his conclusions in the understated prose favored by the British establishment, Salz makes no bones about what went wrong: Barclays went Wall Street. It abandoned the ancient values of sound lending and customer service, replacing them with a relentless emphasis on boosting revenues, booking short-term profits, ramping up bonuses, and putting one over on competitors. In Salz’s view, it was the adoption of this avaricious culture that led some Barclays employees to push the boundaries of acceptable behavior in areas ranging from the employment of leverage, to protecting the interests of customers, to being truthful with regulators. “Their focus on short-term return on equity and their competitive position led to a vacuum in culture and values,” Salz told the Financial Times. “Pay policies reinforced that.”

The theory that culture was the problem is an interesting one. It certainly jibes with the popular sentiment that many bankers, particularly investment bankers, are greedy hustlers, with the values of an alley cat and the self-regard of a mediaeval baron. According to Salz, many people who interviewed with Barclays reported “a sense of an entitlement culture.” Top officials at the bank earned more than a third more than their rivals at other banks, and felt they deserved it. Particularly at the investment bank, from where the LIBOR scandal and other public-relations disaster emanated, there was a pervasive win-at-all-costs attitude, which “may have led to the tendency to argue at times for the letter rather than the spirit of the law.”

That’s the British understatement I was referring to. But Salz didn’t veil all of his criticisms. “Winning at all costs comes at a price: collateral issues of rivalry, arrogance, selfishness, and a lack of humility and generosity,” his report says, and it goes on. “The evidence of highly competitive and overtly revenue-driven behaviors led us to question how far and how deep these behaviors had traveled.” In order for Barclays to avoid a repeat of its recent problems, Salz calls on the company to build a fresh culture that embodies “a new sense of purpose beyond the need to perform financially. It will require establishing shared values, supported by a code of conduct, that create a foundation for improving behaviors….”

Which all sounds very worthy and laudable, except for one thing. As the report acknowledges on page eighty, Barclays already had a set of values and code of conduct. In 2005, John Varley, its then chief executive, issued five “Guiding Principles” for the bank: “customer focus,” “winning together,” “best people,” “pioneering,” and “trusted.” If you suspect that these sound just like the sort of anodyne phrases overpaid consultants dream up, you may be right, but the fact is they existed. And, in 2007, the Salz report informs us, “they were embedded in a refreshed Group Statement on Corporate Conduct and Ethics.” For some reason, this didn’t prevent some of the bank’s employees from getting up to shenanigans like rigging the LIBOR market and misleading regulators about the state of the firm’s balance sheet.

Call me a skeptic, but I am a bit dubious of cultural explanations for financial malfeasance at investment banks, especially explanations that imply it could be prevented by adopting new internal guidelines and forcing the inmates to take remedial classes in humane behavior. Investment bankers are investment bankers, and they always will be. With rare exceptions, the reason they go into the profession is to satisfy their competitive cravings, earn as much money as they can in as little time as possible, buy a big house in a fancy neighborhood, retire early, and do something more interesting with the rest of their lives. Trying to inculcate them with finer values is a pointless endeavor, and so, with the demise of the partnership model, is trying to make them think long-term.

Trapped in a competitive environment that in many ways resembles the “prisoner’s dilemma” beloved of game theorists, investment bankers will inevitably be driven to cut corners, take outlandish risks, and generally engage in behavior that, although privately rational, is socially pernicious. In the famous words of Chuck Prince, “as long as the music is playing, you’ve got to get up and dance.” The only way to control investment banks, and to direct their activities in a more socially useful direction, is to sit on them hard—with strict limits on leverage, intrusive regulation, and harsh punishments for self-dealing behavior.

What went wrong at Barclays wasn’t simply a cultural failure: in some ways, it was a cultural success. Unlike most of its British rivals, the firm survived the financial crisis without an infusion of public equity. (Like all the other big banks, it did get the benefit of cheap emergency lending from the Fed and the Bank of England.) By adopting the scorched-earth tactics and outlook that Diamond and others learned from Wall Street, it transformed itself into the one British firm that could stand toe-to-toe with the likes of Goldman and JP Morgan. But, in accomplishing this, it was driven to do things that contributed to the disasters we have seen in the past five years.

The most startling fact in Salz’s report isn’t that in 2010 and 2011, at a time when its stock price was shot and its dividend payments had been slashed, Barclays paid its employees about nine billion dollars in bonuses and incentive payments. That merely shows that old habits die hard, or don’t die at all. To me, anyway, the real shocker is that, by 2008, Barclays’ leverage ratio—total assets divided by total equity—was forty-three, which means a mere three per cent fall in the value of its assets could have wiped out its entire capital. Even Bear Stearns wasn’t as highly geared as that. (In March, 2008, its leverage ratio was thirty-six.) And Bear, at least, was well known to its debtors and counterparties as a trading house that pushed things to the edge. Barclays was a retail bank that had purposely built up inside it a vast casino.

For that, surely, regulatory failures rather than poor values are ultimately to blame. If Barclays was a third the size it is; if it were a stand-alone investment bank with no depositors’ funds at risk; if it had enough capital to stand on its own two feet after making a calamitous loss—then the arrogance and outsized pay packages of (some of) its employees wouldn’t matter nearly as much. But the bank, like all of its major rivals, is ultimately a ward of the state. If it gets into serious trouble tomorrow, the British government, quite probably with American help, will surely rescue it.

Given this central fact, calls for the big banks to change their internal cultures are somewhat beside the point. Yes, it would be a positive development if they all agreed to follow Salz’s recommendations. (Barclays, under new leadership, has already moved in that direction.) But come the next credit bubble, the new codes of conduct almost certainly won’t prevent them from doing some malign and damaging things. Perhaps nothing can prevent such behavior. But the best bet is effective supervision and regulation.

Above: Anthony Jenkins, Group Chief Executive of Barclays, in February. Photograph by Carl Court/AFP/Getty.