Comments on: How did financial players lose sight of the economy?

By: Vasundhara

Vasundhara — Thu, 12 Feb 2009 08:59:15 +0000

Defining ethics itself is a tricky thing. While the world seems to have become flat, it is full of complex webs of cultures and conflciting objectives. What is best for the company is not always best for the customer and vice versa. While we can definetely learn from mistakes of the past and think up additional checks; the world has and will belong to the fittest. Would it be possible to define \fittest\ to mean health, wealth and character in the future?

By: Craig Prickett

Craig Prickett — Wed, 07 Jan 2009 19:16:54 +0000

I agree with Annalie that the base instinct of people won’t change simply because it is the “right thing” to do.

This is where the role of regulation/oversight could serve the greater good. Consider the case of the Financial Adviser vs. a Mortgage Broker. A Financial Adviser is expected to have a “fiduciary duty” to their client - and it is defined and enforced by the regulatory authorities. Historically, a Mortgage Broker has not borne that responsibility… and in some cases, requires no greater requirement than a willingness to call themselves a Mortgage Broker. Alas, even with oversight we can’t avoid the risk… only mitigate it and stop the most obvious violators.

Unfortunately, even with regulation, we creative and ingenious human beings find ways to ‘get er done” that may wind up hurting others. Call it pushing the envelope, delivering upon market demand, or innovation - we will always try to create new and inventive ways to generate revenue.

The financial players did what they do best - find new ways to generate revenue. Unfortunately, short term gains prevailed over long term objectives. I wonder if the landscape would be different if the board members of these financial players had acted upon their responsibilities to shareholders instead of being whores to increased revenue. It all looked so reasonable at the time….

By: Peter

Peter — Wed, 07 Jan 2009 13:30:35 +0000

By: Annalie Killian

Annalie Killian — Wed, 10 Dec 2008 00:00:02 +0000

Jeff, I recently bought the docudrama, ENRON, Smartest Guys in the Room, which I watched 2 nights ago with my 14 year old daughter who is living a world away from corporate life and the wheeling and dealing of the financial world. I was really interested in her observations…she said, she wonders if she herself wouldnt be tempted to exploit situations if there was a profit to be made and others were too stupid to cotton on, and asked me how I think I would act.

After gulping about the profoundness of this question, I realised that this innocent untainted kid was simply speaking the truth about human nature, especially smart people who get rewarded for success. A point proven through the experiments you referenced.

However, I question how we will magically raise another generation of ethical financial experts doing the right thing by their clients without a fundamental restructure of our DNA and cultural memes. Exploitation of situations plays to the dark side that’s in all of us, and the best way to counter that is having powerful checks and balances. Granted, that is not always foolproof, as the Arthur Andersen complicity - a failure of an armslength check - proved in the ENRON case. But I think we have to look at the whole of the system as we CANNOT rely on integrity of individuals alone.