As you all know, I am a huge fan of Fast Company Magazine and in particular, the regular on-line daily dose of First Impression or Fast Takes. Some of the world's best journalists appear with columns of relevant interest to not only myself but the readers of this blog. So on many occasions you will see me transpose these stories on to the blog with the permission and suitbale acknowledgement for Fast Company. The other day, an example of the ""Big Business-Big Politics" syndrome appeared in my daily e-mail, and I felt compelled to bring you the truth....that is if you can handle the truth.
Two journalists interviewing two different individuals with the same mission. Daniel Pink talks to Charles Lewis, a former high profile broadcaster about Wall Street and Washington---strange bedfellows in the rising tide of corporate greed. And Keith Hammonds interviews Eliot Spitzer,the New York Attorney General who has been fighting an uphill battle to uncover the truth on Wall Street and putting people away for their crimes.
Abraham Maslow defined self-actualization as the process of discovering what you were made to do and making a commitment to do it with excellence. That is what the three circles are all about: making self-actualization work in a capitalist society. No one ever reached self-actualization simply by seizing a bubble moment to get rich and retire. Similarly, no one ever self-actualized by taking the cockroach strategy of just hunkering down and trying to survive until difficult times passed.
There are, of course, no guarantees. Luck is always a factor, and the dice can roll against you. But that does not change the fact that those who go about their lives and work with the passion to create and build in pursuit of self-created goals are the only ones who will find meaning in the end -- regardless of whether the dice roll their way. The fact of the matter is that life is short, and we only carry to our graves the inner integrity of our efforts. Only we know how we lived our lives, whether we cut corners, whether we did anything of value -- or whether we took the built-to-flip approach to life.
In 1989, Charles Lewis left the world of high-profile broadcast journalism to invent the world of what he calls "public-service journalism." Lewis, who was awarded a MacArthur Fellowship in 1998, founded the Center for Public Integrity in 1990 to pursue investigative projects that the major media were neglecting. During the past 12 years, the center has produced 10 books and more than 100 reports documenting the often-sordid ties between big money and big politics.
Isn't the problem limited to a few bad apples?
Not unless the whole world is your orchard. That's a lot of apples, folks! More companies are restating their earnings now than at any time in U.S. history. And by the way: They have dumped hundreds of millions of dollars into the political process to weaken any laws that might exist to curb the excesses.
So Washington is complicit in this?
You can't look at Wall Street without looking at Washington. They're joined at the hip. Congress and the politicians were the enablers for those scandals. They needed the campaign cash. The corporate executives needed certain favors. Everyone got what they wanted -- except, of course, investors and the public. Ninety-six percent of Americans don't contribute to political campaigns at all. The wealthiest elements of this country are sustaining and sponsoring the political process and its actors. What that means is that you get a government that's essentially bought and paid for by the powerful interests affected by those decisions.
If that's right, where's the outrage?
The outrage is muted, because you don't know who to trust. In 1994, we had Newt Gingrich's Contract with America and a new Congress coming to Washington to turn the city on its ear. In their first six months in office, those new members took more campaign money than any previous freshman class in the history of the Congress. We know what happens to Mr. Smith Goes to Washington. It becomes a Stephen King movie.
Do people not want to hear the truth?
Sometimes it does feel like we're trying to force people to drink castor oil. People don't really want to get bad news. But information is power. Until you find out the truth, you can't dig yourself out of the mess.
Who can people trust today to tell us the truth?
It's a very short list. Everyone has been discredited. We have a situation where we don't trust our government or our capitalist system. The level of distrust right now is probably unparalleled since the 1930s.
Is there a way to rebuild that trust?
You set tough standards, and you actually -- what a concept! -- enforce them. You have transparency. You have openness. You have a set of rules. You enforce those rules. I'm sorry if it sounds old-fashioned, but it's time for leadership. In the boardroom. In the Oval Office. On Capitol Hill. Our leaders can't think it's just a few bad apples. They have to take this very seriously and exert new standards in our society. In that sense, it's an exciting moment. We didn't talk like this a year ago.
by Daniel H. Pink
The Investigator: "People Will Be Going to Jail"
MEET ELIOT SPITZER
New York attorney general Eliot Spitzer fits the part of the crusading cop. Last May, his crusade won national notoriety when Merrill Lynch agreed to pay a $100 million fine to atone for the misleading recommendations made by its research analysts.
Spitzer's office is still sniffing out conflicts of interest among Wall Street's analysts and bankers, focusing for the moment on the analysts who are covering failed telecom companies such as WorldCom and on bankers' practice of allotting initial-public-offering shares to favored clients.
What kind of financial crimes are you investigating?
There are two sets of crimes. One is the gamesmanship of CEOs with the numbers. That is elementary fraud. That crime originated in the field, driven by CEOs who wanted to trigger their options or hit unrealistic numbers. They fabricated numbers. That's old-fashioned stuff. The crime that originated on Wall Street was a result of the conflicts and tensions that exist when you have that many decision makers and that much money floating around. The analysts, the investment bankers, the underwriters -- there was an ease with which money could be shifted and markets could be pumped.
Wall Street's stock research has been corrupt for years. Why hasn't anything been done before?
When the market was going up, there was less pain, so there weren't as many complaints. Plus, there were checks and balances that used to exist in the corporate context. You had outside auditors, directors, regulators, shareholders. Every one of those checks fell prey to the notion that things were going so well, no one needed to pay attention. The ease with which people made money masked the underlying tensions. It's when everything falls apart that people start questioning the system.
So the solution is for those people to pay attention?
The solution must involve all market participants. It requires a renewed sense of ethics at every level. It means that CEOs can't simply tell their investment bankers, "Fire this analyst," if a report isn't favorable. It means that the president of the investment bank has to have the willpower to say, "We're not going to change our analyst report just because you're significant banking clients." And mutual funds have to tell their investment bankers, "We expect more of you." I've been telling the trustees of pension funds, "Hey guys, it's your money. You are ultimate fiduciaries, and you have the capacity because of your leverage to set the rules." I think we'll see an awakening on the part of all of those overseers and an end to the era of the imperial CEO.
Where will all of this stand a year from now?
People will be going to jail. Individual criminal liability will be found. Just as important, there will be a rewriting of the rules. Our inquiries and those of others will continue, and the new rules will emerge as a function of individual settlements. Ultimately, we'll see a new structure within which analysts have to operate and new rules about IPO issuances.
Do the people who run Wall Street realize now that they've been doing something wrong?
I'm not sure. I do believe there is a renewed attention to the underlying ethical problems posed by the conflicts of interest on Wall Street. But I don't know whether there is any sense of remorse for wrongdoing.
by Keith H. Hammonds
Buddha says: "A man whose words are lies, who transgresses the Great Law, and who scorns the higher world---there is no evil this man may not do".
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