Bankers and Functional Psychopathy:
The Risk of Losing Everything

Abstract

For at least the past 100 years, a number of financial scandals have rocked the world and ruined the lives of thousands of citizens. In the past decades alone, a number of financiers (most notably Robert Madoff) have been caught and sent to jail. Financial predators have erroneously been labeled as psychopaths. In fact, many are not anti-social at all and do not display dysfunctional impulsively, but rather quite the opposite. The term that describes them best is “functional psychopaths.” This multidisciplinary paper proposes to warn banking and financial institutions about the possibility that an undetected functional psychopath (a financial predator) will, in his drive for success, run their company down. Leeson at Barings is a painful reminder of such a grim scenario.

TOPICS: Wealth management, financial crises and financial market history, in markets