In far reaching remarks on the regulatory status quo of the financial industry, NY Fed President William Dudley, who plans to step down later in 2018, emphasized the importance of changing the culture of financial institutions to reduce risk and bad behavior. Mr. Dudley’s remarks were made in the context of a larger discussion of the ongoing effort to recalibrate some of the vast number of regulatory rules aimed at the financial services industry in the wake of the 2008 financial collapse. According to Mr. Dudley, too much regulatory red tape can create a dynamic where banks feel free to do anything that falls within the rules, even if the actions do not comply with the overall spirit of the law. In lieu of more red tape, Mr. Dudley suggested that regulators assist banks in rectifying bank cultures to discourage bad actors without requiring regulators to act at all. Part of this effort, according to Mr. Dudley, would involve the changing of bank compensation plans to rely paying with company debt, not stocks and cash which can incentivize short-term profits over long-term growth. Additionally, Mr. Dudley stated that “[a]nother possible reform could involve putting a greater onus on senior management for the costs incurred from regulatory fines or other legal liabilities, rather than shareholder alone.” Mr. Dudley admitted that the reforms may need a “push from the regulatory side”. His comments highlight how culture has taken on greater importance among regulators in how companies, especially financial institutions, operate, but it also raises a question of whether culture changes should be driven by regulators.