A financial lesson in humility

Pope Francis shows mega-banks how to do it

Confessing one's sins is relatively easy. Penance can be painful, but usually ends fast. Leading a better life, though, is a lot more difficult. Pope Francis is ensuring that the Vatican's financial system is well on the way. And by doing so he is also schooling Wall Street on how to clean house.

God's and mankind's bankers share a patchy history. The financial sins of both stretch back decades, at least - as do efforts to overcome them. Every few years, there's remorse. The headlines about corruption at the Vatican kept coming, though, while Wall Street hopped from one scandal to the next.

The Vatican is leading the way in setting things right. Financial reform was high on the agenda of the cardinals who chose Francis as pope. He has obliged, culminating on Wednesday with a new management team for both the Institute for Works of Religion, better known in English as the Vatican Bank, and the Vatican's other financial business. He is also imposing a new supervisory board and organisational structure. Perhaps the most important long-term change he has made forces the bank to retreat to purely church-related business.

Compare that to the big earthly financial institutions. They have certainly paid some penance for almost wrecking the global financial system. Several firms have paid multibillion-dollar fines - in recent months JPMorgan handed over $13 billion and BNP Paribas almost $9 billion. Citi is set to part ways with $7 billion. Most banks have exited some controversial businesses and a handful of bosses have lost their job.

Yet the reforms have not altered the industry's basic corporate structure. Some banks are even bigger than before. The culture still appears to encourage rapacious and risky behaviour, as Barclays' recent lawsuit against its equity trading dark pool operations implies.

Change is not easy, even at the Vatican. It took a firm cardinal - Australian George Pell - with the unwavering backing of an extremely popular pontiff, to get the whole job done. Even then, the effort might have stalled without relentless outside pressure and publicity. The latter has certainly kept the heat up on Wall Street. People have to want to change, though - converting hearts, Francis might call it. But Christian forgiveness only goes so far. If those in power are too recalcitrant, the pope has the right remedy: replace them.