Corporate Responsibility: Individuals Also Need to Look in the Mirror

Almost another month has passed since the one-year anniversary of the demise of Lehman Brothers.  For the most part, financial services reform legislation introduced earlier this year has languished behind health care, though recent hearings and rumblings offer some signs of life.  The bipartisan Financial Crisis Inquiry Commission charged with investigating and reporting out the causes of the financial meltdown just got started last month. 

Leave aside for a moment the disappointing fact that we, the people, and many of our public institutions like legislative bodies and the media, our vaunted fourth estate, have such difficulty grappling with more than one major issue at a time.  On the financial services front, it is no small matter that we seem to have put the cart before the horse.  Not that the Commission is the “be all to end all” in terms of providing answers, but it is unfortunate to say the least that federal solutions are being debated, crystallized, and politicized through legislation at the same time the official, public inquiry meant to identify the very problems we are trying to solve is just beginning.  But, I fear we have an even bigger problem.  

By and large, what discussion there has been about financial services reform has focused on “them.”  Be it Wall Street, Congress, fat cat CEO’s, regulators asleep at the switch, “they” have riveted our limited attention to date.  Yet, in the midst of all of the finger pointing, I have seen or heard precious little about what the millions of us who work for businesses large and small can and should be doing to further the necessary reforms in financial institutions and businesses generally. 

Before claiming that there is nothing that can be done, let’s remember that collectively we made minor deities out of CEO’s and all those who reaped hundreds of millions of dollars.  We bought into the idea that short-term profits alone could be our long-term guide.  We believed quantitative financial models unleavened by common sense and real-world experience revealed the future.  We acted and invested as if what goes up continues to go up and what goes around never comes around. Having made these mistakes, corrective action cannot be limited to public policies and prescriptions for other people’s compensation, other companies, and other-worldly financial instruments no one really understood.  

It’s time to look in the mirror and acknowledge we’re all on the hook for turning things around.  The starting and ending points for corporate reform lie within each of us, within reconfigured senses of individual responsibility and reputation.

Tales From Lehman’s Crypt – NYTimes.com

Tales From Lehman’s Crypt – NYTimes.com.

Reflections on the eve of the one-year anniversary of the demise of Lehman Brothers reveal a business that was missing pieces.

Can We Say “Lemmings”?

Yesterday, the New York Times published “Tales from Lehman’s Crypt.”  In the article, Richard McKinney is quoted as saying, “From a policy perspective, the regulators have to step in.  It would be an awful lot to ask the Street to not look for revenue opportunities where their competitors are finding revenue.” 

Remember the old saw usually attributed to wise mothers, “If your friends told you to jump off a bridge, would you?”  Our response invariably was, “Of course not.”  Yet, here we have one gentleman identified as the former leader of Lehman’s mortgage trading business who wants regulators to lead.  What I hear embedded in the comment is someone not only embracing, if not demanding, federal intervention in the marketplace but also  conceding that neither he nor his colleagues could make the responsible choice on their own. 

Corporate responsibility is not about waiting for word from Washington or the corner office before doing what is right.  Corporate responsibility must be embraced and exercised at every level of the enterprise. 

As a former employee of a financial services firm and a government official, I am neither casting the first stone nor diminishing the pressures of following the herd nor failing to appreciate the merits of government creating a level playing field in which all can compete fairly.    However, as the Lehman situation and many others make clear, thinking and acting responsibly is not optional if there is to be long-term success.  Moreover, “passing the buck” to Washington or a state capital smacks of hypocrisy when we denigrate “bureacrats” in one breath and call upon them as the only ones capable of saving us from jumping off the bridge or rushing over the cliff . . . like lemmings.