Welcome to Finlay ON Governance, where these pages predicted, captured and analyzed many of the seminal events that led to the greatest crisis in capitalism since the 1930s, and the breakdowns in regulation and leadership that paved their way.
We were the first to highlight the boardroom failures of many companies, from Bear Stearns and Lehman Brothers to Nortel and Hollinger. We brought the insider weaknesses and potentially fatal governance flaws of RIM/Blackberry to public attention, warned the world about the ticking time bomb at Livent, and highlighted the antiquated governance practices of Apple long before scandals rocked those companies.
We were also the first to raise serious questions about the self-serving and self-perpetuating governance practices of the New York Federal Reserve, which we have long maintained were a major, and much underreported, factor in some of the misguided decisions that led to the 21st century’s global banking crisis. We advanced a number of other provocative thoughts on many of the decisions and figures that played prominent roles in the economic drama of a generation and predicted the historically wide gap in income between the very wealthy and the middle class would produce catastrophic results. It soon did, and will again.
One of the great lessons that stands out from the painful events of the past is that it is wise to question conventional thinking, and especially who is setting it and benefiting from it the most.
Times are calmer, for now, in the financial system and in many boardrooms. The firestorm of public anger and ethical betrayal that threatened to consume large blocks of Wall Street, if not much of the world’s modern credit system, has abated. But smaller blazes still break out here and there across the corporate and public governance landscape. Many of the ethical shortcomings that led to the crisis of a few short years ago –the arrogance of power and the unchecked greed– have not disappeared; they have only cleverly camouflaged themselves in order to allow public and media attention to move on to other things. Well-rounded human beings, who are not typically enamored of fleets of private jets and mansions the size of football stadiums, crave normalcy, after all. But there should be no doubt that these same forces that inflicted so much pain will reemerge and bring with them scandal and destruction once again.
When all is said and done, the basic laws of human behavior remain pretty much immutable. Whether great villains of history or modern rogues of business, those at the top often prefer the dark shadows of self-aggrandizement and deception in which to bend power for their own selfish purposes unless a vigilant public, as voters, consumers and shareholders, insists upon shining the spotlight of accountability, and the values of human dignity, on their actions.
In the many years I advised some of the world’s most prominent organizations, and tried to alert others to the folly of their direction, I saw the consequences that befall from the illusion of invincible status time and again. I also saw the good that comes from leaders who are driven by a true moral compass and the innate sense that things can be made better and that the real job of leadership is to work to make them better for everyone in a way that can enrich us all.
I hope these postings from this uniquely revealing period in our lives will give a clue to what to look for in the future in distinguishing the princes of folly from the real champions of social progress.
Recent multi-billion dollar settlements involving Bank of America and JP Morgan Chase show the staggering costs of ethical folly and the culture of moral hazard that places too many companies, and capitalism itself, at risk.
The tsunami of wrongdoing and excess that caused barely a ripple of inconvenience at the top.
The indisputable economic (and moral) fact of our time is that America’s most wealthy, from whom capitalism’s CEOs, directors, guardians and gatekeepers are drawn, not only allowed this torrent of financial chicanery and deception to occur, they profited handsomely from it.
Other recent postings