What in tarnation is a board member to do with all of those “new fangled” securities that are so goldang hard to understand? That is the essence of Jack Welch’s Welch Way column in BusinessWeek posted on January 14, 2009.
The wealthy of America don’t get it! The rest of us are fed up! It’s not just the people on Wall Street. It’s the economists, the managers of the big corporations, the people who manage our government entities and everyone else that have “life styles of the rich and famous.” All of them have taken advantage of the free enterprise system but few have participated in making America and the world a better place.
The eight CEOs of the largest banks and investment houses in the country looked totally foolish at a televised House committee hearing today. These were the leaders of Wells Fargo & Co., Morgan Stanley, The Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., State Street Corp. and the Bank of New York Mellon. None of them were apologetic about receiving outrageously high pay as their banks were losing money. Despite claiming to be experts in their field none could explain how they had been unable to see the credit crises they had created.
Jack Welch defended corporate CEOs and boards in his BusinessWeek column How Much Blame Do Boards Deserve? contending, “Unfortunately, even boards with sound judgment didn’t stand much of a chance against the newfangled financial instruments that sparked this crisis.” He writes in this column “board members are only at a company “one or two days a month and are composed of individuals who also hold demanding full-time jobs.” He says Shareholder activists expect too much from board members. So why do so many board members receive pay of $100,000 or more per year?
The Peanut Corporation of America was reported to have knowingly shipped contaminated food. The owners and managers refused to testify to a congressional committee and sight their rights under the 5th amendment of the Constitution. They take the position that it only cost nine deaths and sickened 600 people. From an Associated Press report, “The company’s internal records show it “was more concerned with its bottom line than the safety of its customers,” said committee Chairman Henry Waxman, D-Calif.”
The real issue is the wealthy protecting their fifedoms. Neither stock holders, employees, nor government have any control over their behavior. The irreconcilable excuses of executives in finance, auto manufacturing, and other industries will ultimately result in more government control. However their power will not diminish significantly and they will continue to be spearate from mainstream America. This is all the result of the laissez-faire philosophy laid out by President Ronald Reagan when he said “government is the problem.” That president was wrong. Greed is the problem.
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