and strict enforcement. but illicit and unethical behavior is rarely the result of an isolated “ bad apple. ” it ’ s more often the symptom of a rotten culture. and rotten cultures don ’ t appear overnight — nor for that matter do positive, inclusive ones, where people feel empowered and accountable to upholding the values of the organization. culture is created — intentionally or otherwise — by the structures, incentives, and behavioral norms that shape our working lives. today i want to move our attention away from the extreme behavior that makes the headlines, and think more deeply about organizational cultures. what does a good culture look like? how can leaders in the industry establish a positive culture 1 / 4 bis central bankers'speeches within their firms? and perhaps hardest of all, how do you ensure that a firm ’ s culture adapts to the changing world, but still stays true to its values and purpose? an ethical dilemma consider this : 2 a junior banker on a successful real estate investment team is asked to run projections for future rental income for a mall in hong kong. as part of her research she notices a number in a spreadsheet that inflates future cash flows by 4 percent. she asks a senior analyst if the number should be flagged as an optimistic assumption, so it ’ s clear it ’ s not based on evidence. the senior analyst responds by saying the number is a more conservative estimate than many. he says it ’ s a “ judgment call ” and that they can discuss it once the project has concluded. but the project comes and goes, everyone is busy, and the senior analyst doesn ’ t bring it up again. this scenario raises numerous questions : should the junior team member raise the issue again or should she let it go? what was driving the behavior of the senior analyst? and why did no one else on the team view the situation as an ethical dilemma? these are the kinds of issues that people often face in a work environment. and this example demonstrates many of the ways culture influences behavior. employees may enter an organization with a strong sense of right and wrong. what they may not realize is that group norms can exert a powerful magnetic pull on their moral compass. the junior banker knew the way the number was being presented was unethical, and yet she complied with her boss. the response from the senior analyst, describing the situation as a “ judgment call, ” is a common phenomenon. using a euphemism to describe the inflated statistic

that staten island ’ s economy was actually more resilient than manhattan ’ s during the recession, experiencing only minimal job losses. staten island ’ s key industries – local - market sectors like health, education and retail trade – tend to be less susceptible to sharp economic downturns than more cyclical sectors, like manufacturing, construction and finance. even so, not all indicators of the local economy are improving. unemployment remains stubbornly high, at just over 8 percent. and home prices, though recovering gradually, are still down about 15 percent from where they were back in 2007. this compares to nationally where they are down about 25 percent on average. the new york fed ’ s quarterly measures of household credit conditions signal some recent improvement, though there clearly remain pockets of financial stress among families here. at year - end, for those people with a credit report, average debt per person in staten island ticked up, rising to about $ 67, 000, after trending down for a number of years. a similar uptick in debt was observed nationwide, potentially signaling that households are now somewhat more willing to take on debt. delinquency rates, however, are still fairly high : 9. 7 percent of all debt in the county is seriously delinquent, well above the national rate. on a more positive note, delinquency rates on staten island are declining and are at their lowest level in 3½ years. mortgage delinquency rates, though still above the national rate, are also at a 3½ - year low. recently, of course, staten island ’ s greatest challenge has been the massive disruption and destruction caused by superstorm sandy. while many parts of the new york city metropolitan region were hard - hit by the storm, the devastation was particularly severe here on staten island. and this is something that has had large consequences for some of my colleagues at the federal reserve bank of new york. nearly 150 of our employees call staten island their home. while many, thankfully, were spared the full brunt of the storm, i know quite a few people whose homes were destroyed or severely damaged and others who lost many of their belongings. immediately following sandy, our regional and community outreach function reached out to all of the affected communities as part of a needs assessment. we asked : “ how can the new york fed best leverage our resources to help our community? ” after dozens of conversations with leaders of the community, we determined that pulling together key service providers under one roof would