It is almost surreal. Concerns over Wall Street practices and economic inequality that have led to sit-ins and rallies in New York and elsewhere reverberated up to the White House last Thursday, with President Obama saying the protesters are expressing the frustrations of the American public.
The president said he understood the public's concerns about how the nation's financial system works and said Americans see Wall Street as an example of the financial industry "not always following the rules." True enough. However, only days earlier, these same Americans, who have been long-suffering victims, were the target of his criticism. President Obama recently told an Orlando television reporter that our country has "grown soft." He also acknowledged that some "folks" have not been playing by "the rules."
Mr. President, the country has not "grown soft" and the issue is less about playing "by the rules" than it is about enforcing the law for those who do not. When people do not obey the law, whether rich or poor, it is expected that they will be held accountable. Securities fraud is a crime; insider trading is a crime; market manipulation is a crime. So, too, are perjury, obstruction of justice and witness tampering.
It appears to many that what has "gone soft" is our Justice system. People are frustrated that the government appears to have more time, resources and interest in prosecuting professional athletes for alleged steroid use than white collar criminals causing cataclysmic financial setbacks to tens of millions of people. Not a single architect the financial crisis that has brought the U.S. to its knees has yet been charged. Americans wonder why not.
Americans feel a sense of deep frustration and helplessness in the face of the mounting oppressive problems that the gasping economy and rudderless leadership in Congress have engendered. This growing public outcry shouldn't be surprising at all. This is not new; it has been building for years. It has been exacerbated by a perceived inconsistent strategy, weak leadership and failed policies. Use the word "recovery" all you want; but Americans feel we have been in a recession for over three years.
A year ago, former Medtronic CEO and current Harvard Professor, Bill George stated...
The highly visible corporate leadership failures of recent years have deeply shaken public confidence in business leaders. All too often these leaders have placed self-interest ahead of the well-being of their organizations. After the companies got in trouble, their leaders then refused to take responsibility for the harm caused to the people they served. The problems at British Petroleum, Hewlett-Packard, and failed Wall Street firms, along with the actions of dozens of leaders who failed in the post-Enron era, are glaring examples of these lapses in leadership.
Consequently, there has been a widespread and dramatic loss of trust in business and political leaders in the past decade. People are angry and suspicious. Can you blame them? This is almost all-pervasive. The Harvard Center for Public Leadership 2009 National Leadership Index revealed that 69 percent of those surveyed believe there is a leadership crisis in the U.S., with politicians, media, finance, and business leaders getting the lowest ratings. The same is true in Europe. This is even more the case in 2011. Very discouraging.
What can we do to repair the visibly eroding standards of leadership? We must turn up the heat on our leaders. We must further turn the heat up on elected officials to uphold the law. Also, let's hold ourselves to the highest exemplary standards. Not out of fear of legal consequences. And despite the most prominent examples to the contrary. First, we can strive to be role models of leadership that exude the following leadership qualities...
•The vision to spell out clearly what we will do for those who depend upon us.
•The drive to share that vision broadly with those who have the biggest stake in our success.
•The courage to challenge the status quo, stimulate the change, and to make decisions that move us forward in even the most difficult times.
•The ability to inspire people to action, individually and in teams, to achieve our goals.
•The foresight to empower people to learn new skills and stretch their capabilities to higher levels of achievement.
•The wisdom to listen, learn, and translate that knowledge into higher performance.
•The willingness to recognize accomplishments and celebrate successes.
•The integrity to serve as a good example through actions that consistently reinforce our basic values.
Implementing a new strategy requires a leader who can drive an organization, energize its operations, and inspire its people. This kind of leader must personify the organization's purpose, through values, thinking, and character - all necessary to inspire and energize commitment to the strategy and goals of the leader and to secure the allegiances required to make any bold purpose succeed. Clearly, an essential element of leadership is trust.
High performance leaders and organizations believe that words and deeds should match and have the guts and intestinal fortitude to keep their promises through thick and thin, in good times and bad. It is in translating the commitment to consistent, purposeful action, often under fire (business downturn, budget crisis, etc.) that the true test of leadership is passed or failed. Without the requisite character and integrity, the organization is "built to fail" not "built to last." According to the noted Edward R. Murrow:
To be persuasive, we must be believable;
To be believable, we must be credible;
To be credible, we must be truthful.
Second, we can uphold the law and prosecute lawbreakers, including "white collar criminals", no matter how highly placed or cozy with government officials. As highlighted in the 2011 Oscar award winning Documentary "Inside Job," hundreds of billions of dollars have been lost by investors while millions of borrowers have lost their homes. Yet, none of the people who ran the institutions that contributed to the disaster have been found liable.
If these people are not to be indicted for criminal fraud, then the Wall Street/ financial services leadership that recklessly crashed the economy must be breathing easier and celebrating their ill-gotten record gains.
The world was brought to the brink by the American banking/mortgage system and thus far, no one has been held accountable. Why not? On my way to getting my Ph.D. in psychology, one of the most important principles I learned was the notion that what gets rewarded gets repeated. That which gets punished gets extinguished. If malfeasance and downright corruption are not punished, they will return and again shake our very foundations.
We will never be able to get this behind us if we do not get full and complete investigations with accountability and punishment for the guilty parties.
The banks and financial services companies that tanked the world economy got off with carefully orchestrated settlements. The companies paid small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice.
This stands in striking contrast to the failure of many savings and loan institutions in the late 1980s. In the wake of that debacle, special government task forces referred 1,100 cases to prosecutors, resulting in more than 800 bank officials going to jail. Among the best-known: Charles H. Keating Jr. of Lincoln Savings and Loan in Arizona. So, 800 bank officials went to jail then, and zero have been incarcerated now, for malfeasance that is much larger, more damaging and more resistant to recovery. Many are explaining this by noting that a large sum of the President's campaign contributions come from Wall Street. They wonder if Wall Street owns the Federal Government.
Our elected and appointed officials must do their jobs, satisfy their commitment to transparency, responsibility and accountability. We must "keep the heat on." In this way, justice may eventually be done.
So many leaders have failed themselves, their families, their shareholders, and their neighbors on the most important of leadership behaviors...honesty, integrity and ethical decision-making. It is a national disgrace. We have lost our standing on the world stage. Let's try to rid the world of companies that abuse shareholders, customers, employees and society.
It is time for the "good guys" to win and the "bad guys" to lose. Americans will be just fine when they see that the system works.