The word banker never used to be an insult. It once stood for a pillar of the community, a captain of capitalism. But bankers’ reputations have soured as their bonuses have bloated.

You cannot condemn an entire industry on the reputation of one rogue trader. But the £3.7 billion hit to Soc Gen from Jérôme Kerviel’s bad bets comes at an extraordinary time for the banking world. That hit pales beside the £67 billion writedowns that the banks have taken on their exposure to sub-prime debt so far.

There is something rotten in the state of banking, and the smell isn’t just coming from France.

Roger Steare, Professor of Organisational Ethics at Cass Business School, has completed some intriguing research into the banking industry’s morals. He put more than 700 executives working in financial services firms through integrity tests. These financiers were as a group less honest, less loyal and had less self-discipline than the average British worker. Professor Steare believes that the lack of self-discipline in the profession indicates a culture of greed and short-termism.

In the midst of the biggest banking crisis in years bonuses are only 16 per cent down in London. Payouts are likely to top £7 billion in total, still the second best year on record.

The extraordinary size of the bonuses sloshing round the banking system are well documented, as are tales of excess. Over the past year, the FTSE has fallen nearly 10 per cent, as the sub-prime fallout takes its toll on the markets. As investors, we are long-term players. That number flipping from red to black and back again on traders’ screens represents our pensions and our savings.

The market is suffering from the short-termist gambles of bonus-chasing bankers using ever more complicated investment vehicles to package and repackage the mortgage debt of poor working class Americans.

Meanwhile, yesterday a London restaurant unveiled its special £1,000 a head menu for the bonus season. Diners at Vivat Bacchus will eat caviar, lobster, rare Wagyu cattle steak, washed down by wines costing £650 a bottle. The bonus season is alive and well for some. If your bit of the outfit has outperformed this year, no matter that the guys on a different floor are bringing the West’s banks to their knees. Bring on the Crystal.

Banks must address the mismatch between the desire from investors for the captains of capitalism to take a long view, and the short-termist hustler mentality that the banks’ cultures and reward systems foster. Some greed is good; but it needs to be tempered by other values. Honesty, loyalty and self-discipline perhaps?

A little bit of each of these may have stopped the sale of sub-prime mortgages snowballing into a catastrophic crisis. It may be difficult to stop a rogue trader with none of these qualities from punching a black hole in a bank’s finances. But surely it should not be beyond the wit of these well-paid and clever bankers to regulate their affairs as corporate entities with more integrity than that shown by one renegade?

The reputational damage engendered by the sub-prime crisis, not to mention the forced sale of assets to a variety of sovereign wealth funds, ought to be incentive enough for a little fundamental navel-gazing at the banks. After all, their spectacular gamble on arcane structured debt products will be remembered with shudders when Jérôme Kerviel’s name is just a pub quiz answer.

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