Hello again. This commentator’s voice was temporarily “semi-silenced” in early October by a minor stroke. I was in New York City at a luncheon meeting when a tiny blood clot laid me low. Happy to report I expect full recovery…but what a time to be silenced! The biggest story in accountability is steadily unfolding before our eyes – or should we more accurately call this the 21stCentury’s biggest failure of our leaders holding themselvesaccountable!
We keep thinking about the questions we would like to ask those who guided their once-venerable business enterprises to absolute ruin, and those who had the responsibility for oversight of these enterprises. What were the top leaders in banking and finance thinking when they decided to engage in the risky behaviors that led to the collapse of their firms and the capital markets? Where were the boards of directors of these outfits – and what questions were they asking the top executives? Where were the top regulators who were responsible for oversight in commercial banking, investment banking, debt issuance, and related activities as the capital market players’ behavior grew ever-more riskier? What were the regulators thinking as risk management was tossed overboard? What were they thinking in the credit risk agencies – the leaders at the top –when investment grade ratings were handed out by their companies (like the little gold stars we used to get in Kindergarten) to mortgage-debt securitizers? Where was their due-diligence?
The Big Yellow Bus and the Cliffs That Beckon
I have this vivid picture in my mind of a big yellow school bus, and the leaders of (too-many) financial firms packing their people on the bus. “It’ll be a grand ride, you’ll see,” they shout to their followers. “Climb aboard!” Then the big yellow bus – actually too many yellow buses – begins hurtling toward the cliff – “Faster, faster, we’re making great time!” (And besides the buses that got there first, got the biggest bonuses!”)
One-by-one the big yellow buses plunge off the cliff – Countrywide, Washington Mutual, Bear Stearns, Lehman Brothers, and others – only trouble is, this mind-picture is not a product of a dream or my imagination -– this is the real world!
Too many un-accountable boards and senior executives blew up their own companies – taking everyone aboard the metaphorical buses off the cliff. And in the process dramatically affecting the lives of tens of millions of other people…most of them knew nothing about those grand bus rides…about the big bonuses lavishly handed out on Wall Street in 2007…the outsized CEO comp packages…the very golden parachutes for failed leadership…but it was oh so much fun and oh so rewarding while it lasted!
We are happy to be back at the keyboard to comment on the Big Accountability Story of our generation. We close with this piece of wisdom shared by a colleague at the former Daimler-Chrysler. The charismatic former head of the once-combined automaker, Dieter Zetche – who now runs Daimler worldwide – always counseled his managers: “Hope is not a business strategy.” It appears that too-many leaders in banking and in the capital markets were hoping to make the big numbers and now the rest of us will be paying a big price!
And as we said…this is all about corporate and individual accountability – or the egregious lack thereof!