We don't want spivs in charge of our financial institutions, says historian
The Harvard professor appeared at the Ilkley Literature Festival this weekend to speak about Siegmund Warburg, the Jewish banker who fled Hitler's Germany and helped established the City of London as the world's pre-eminent financial centre.
Warburg, who died in 1982, is the subject of Prof Ferguson's major new book, High Financier, which was 12 years in the making.
In an interview with the Yorkshire Post, the author said: "Bankers need an ethical framework. They can't simply operate like Gordon Gekko – greed is good.
"The notion that your only concern as a chief executive of an investment bank or a commercial bank should be shareholder value, in other words quarterly numbers, is deeply wrong and we saw where it got us when the financial crisis struck."
He said Warburg was the antithesis of Angelo Mozilo, the former chief of the Countrywide bank who last week agreed to a settlement of $67.5m to resolve charges of duping the sub-prime lender's investors while lining his own pockets.
The last-minute deal with the US Securities and Exchange Commission came before his trial on civil fraud charges was due to start.
Prof Ferguson said: "For Warburg, the most important thing for a banker was to have moral standing and to regard reputation as both sacrosanct and incredibly fragile, something that could be damaged even by sloppy punctuation.
"The most important lesson is we want people like that to run banks. We don't want spivs in charge of financial institutions; they are too important.
"You can't let a bunch of wideboys run large financial institutions. You need people who have some integrity.
"The real point of the book is to give people an example of what qualities you should look for in a banker.
"It's also quite important for the many people in this country and the US, who are very mad at bankers, with good reason, to realise that not all bankers are crooks and there is a way to be a banker, which combines professional excellence with morality."
He added: "Out there, there are still Warburg-like figures who conduct their business with discretion and responsibility. We mustn't make the mistake of regarding all bankers as being equally bad."
After arriving in London, Warburg introduced the hostile takeover, helped create the Eurobond market and "really gingered up" the way banks were run.
Warburg wanted his bank to adhere to the highest possible moral and ethical standards and pursue excellence and perfection, particularly in the way it looked after its clients.
"Its performance was consistently better than that of all the older, established merchant banks and the new ones and that was true even in the dog days of the 1970s when inflation spiked and a banking crisis struck, so he was right," said Prof Ferguson.
Many bankers today refer to counter-parties rather than clients, a practice that Warburg would have regarded as "blasphemous", he added.
Hear Niall Ferguson in conversation at the Ilkley Literature Festival, at yorkshirepost.co.uk/ booksoutloud