As Barclays' Libor scandal deepens by the hour, one thing is clear: lots of people inside the bank knew about this. Why didn't they raise the alarm?

In dozens of interviews over the past nine months with people working in finance, this question has come up time and again: why does finance, in spite of considerable investments in internal policing, fail to self-correct? The short answer is greed, but there is more.

Going over the interviews, all of which can be read online, it is clear that at least some people in finance are not primarily driven by money. But they are afraid, powerless, or both. Indeed, if you had to design a working environment that encouraged short-termist conformism and discouraged whistle blowing, then the finance sector would be your blueprint.

Take job security. In most big banks you can receive notice and find yourself being marched out of the building by security five minutes later. Some banks have annual "cullings", but even those who have avoided this have been going through redundancy rounds because of the harsh economic climate. Every quarter, managers sit down with human resources to put crosses next to some staff names.

If this creates a climate of fear, consider the average career pattern. Most people try to switch banks or roles every few years. Imagine when you know there is a huge problem in your bank - you also know it's time to move on to the next job.

As this derivatives trader put it: "There are just cycles of new guys coming in. It's like an election cycle, really. They fire the senior guy and bring in a new guy, for x million. New guy kicks out four more guys and brings in his own. When after three years it hasn't worked out, the bank fires those five and it starts all over."

Add to this the fact that people in finance are generally overpaid, so if they move to another industry they have to take a cut – which affects their ability to pay school fees and mortgages. That is assuming they can find a job – because the economy isn't exactly booming and skills that are highly valued in finance are next to worthless elsewhere.

Finally, there's the psychological dynamic, perhaps the strongest of all. Most high-flyers in investment banks describe their job not as work, but as a life.

This former treasurer was one such banker. His division took such huge risks that his bank failed. Looking back he said: "I was having a great time – travelled around the world, feted by people. I used to be invited to every major sporting event in the world … Every one is nice to you because you represent a chance for them to make money. It becomes very tempting to think that actually all these people like you for who you are.

"I stressed internally the risk we were taking. But you have to understand: nobody likes a prophet of doom."

But everybody likes a nice chap: "Bankers work in teams, and the ethic there is: you are with us or you're against us. Speaking out makes you vulnerable. If you have a guilty secret hidden somewhere, they'll find it and expose you.

"This isn't just the bonus culture. This is about tribal bonding, about belonging and sticking with your mates. Your sense of worth begins to be formed by what you do. It is often the first question people ask: what do you? At that time [before the bank failed], when I answered that question, I was a superstar."

Read the emails that the Financial Services Authority made public between traders at Barclays and you know what this former treasurer meant when he said: "If you go public about something in the bank you believe to be wrong, in one stroke you place yourself outside of that world. It's not just your job – it's your identity."