07/01/2010 12:26 pm ET Updated May 25, 2011

Unethical Behavior, Lack of Transparency and "Greed" Can Thwart Financial Reform

Congress will eventually pass financial reform legislation for President Barack Obama to sign. Souvenir pens will be distributed, champagne corks popped and lobbyists will count their success fees for giving their financial clients more wiggle room.

Chris Dodd, chairman of the Senate Committee on Banking and Barney Frank, chairman of the House Committee on Financial Resources Chairman have orchestrated an omnibus bill that is as good as they could get in the politically charged Congress.

Yet, they have sidestepped reforming Fannie Mae and Freddie Mac, the secondary market mortgage giants that continue to soak up billions of taxpayers' dollars. Additionally, critics are questioning whether it will deter "greedy" Wall Street types from making outrageous fortunes by exploiting loopholes in the law.

But long after the nuances are better understood and loopholes closed, diligent enforcement and ethical business practices will ultimately foretell if it is successful.

James Mitchell, a Longboat Key, Fla. resident, was included in the "100 Most Influential People in Business Ethics," by Ethisphere Magazine, in Feb. 2009. He retired as chairman and CEO of IDS Life Insurance Co., a subsidiary of the American Express Co. The magazine says that Mitchell worked to promote ethical practices in the financial industry.

"Did the individual conceive of new approaches or otherwise materially contribute to the field of business ethics theory in a way that could be easily applied by corporate leaders?" Ethisphere cites as one criteria for getting on its list. Another benchmark is transforming "a specific business' operational practices consistent with profitable ethical leadership, forcing competitors to follow suit or fall behind?"

Interestingly, the magazine includes profitability in its ethics criteria.

Robert Noyce, a pioneer in the computer-chip industry and Intel co-founder, said, "If ethics are poor at the top, that behavior is copied down through the organization." Intel's grants, scholarships and donations for charitable causes are widely know in the Silicon Valley community of California. Notably, the company has also been enormously profitable.

David Ryan was ordained as an American Baptist minister in 1958 and more recently founded a church in Venice, Fla. called, "Helpers Exchange." He believes that helping others is a basic tenant of ethical behavior. "I would use the criteria of helpfulness as being more important than any outward display of piety or generosity."

"There are no absolutes in my judgment but I think there are highly probable provisional ethics," he said, referring me to Michael Shermer's book, The Science of Good and Evil: Why People Cheat, Gossip, Care, Share, and Follow the Golden Rule.

Treating your employees and customers in accordance with the Golden Rule will be reciprocated with loyalty. Moreover, it transcends into your social and family life.

"Some very outstanding business leaders have shared their religious values and inspired certain people in the process," Ryan says.

But it does not always work. Integrity Bank of Alpharetta, Ga. It was founded on Christian principles, according to media reports.

Steven Skow, Integrity's founder, gave away 10 percent of annual profits to churches and faith-based charities. "We just managed the bank on godly principles, like the golden rule," he said.

Integrity failed in 2008. Two of its bank officers and a builder were charged with "bank fraud, conspiracy and bribery," said United States attorney Sally Quillian.

Helpers Exchange's Ryan believes "transparency is essential for all ethics (and) when processes are transparent, it is harder for people to deceive and cheat."

Businesspersons that are opaque in their dealings and treat others unfairly are trusted less. Untrustworthy business people have difficulty selling their products and services. Unethical behavior has real consequences.

The 2,000-page, reform bill is comprehensive and has many features to make a repeat of the financial meltdown less likely. But in the end, transparency, ethical behavior and enforcement will be the glue holding it together.

Jerry Chautin is business columnist and former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him at