Was Goldman Sachs Really Politically Impotent amid Public Scrutiny in the Wake of the Financial Crisis?

If the American financial houses on Wall Street are among the most powerful forces in American politics-- powers, as it were, behind the throne--does it make sense that the strongest bank would be politically impotent?  In other words, can a public blemish nullify the power of all that capital?

The full essay is at "Goldman Sachs: Politically Impotent?"

See also "Essays on the Financial Crisis," available at Amazon. 

Mr. Goldman Goes to Washington

After watching hours of the US House Government Affairs committee on Investigations’ hearing on Goldman Sachs in 2010,  I concluded--totally contrary to the disavowals by the Goldman managers who testified--that there was indeed a conflict of interest between Goldman’s proprietary and market-making functions.  By proprietary, I mean a bank trading on its own books beyond simply being the counter-party in its market-making transactions. In their testimony, Goldman managers presumed that all of the bank’s proprietary transactions are part of its market-making role. However, I contend that the bank has been both a market-maker and a player in those markets, and furthermore that the latter function has affected the former in ways that are intended to benefit the bank. That is to say, Goldman Sachs’ financial interest has been put before that of its customers. In some cases, Goldman’s employees refused clients’ requests for shorts related to the housing market so Goldman’s own profits in shorting the market  could be preserved. Sen. Susan Collins (R-ME) said, “There is something unseemly about Goldman betting against the housing market as it is selling housing-related products to its customers.” Sen. Conrad, a more conservative Republican, echoed this sentiment.  The fact that Republicans on the subcommittee joined with Democrats rather than joined in Goldman’s paradigm points to a major disconnect between Wall Street “speak” and the discourse of the general public.  In other words, the financial managers and the politicians were largely talking past each other.  Even so, the two “worlds” can be translated into a common language that nonetheless finds Goldman culpable, while acknowledging some of the managers’ points.  In what follows, I discuss a number of the points raised in the hearing to bear out my contentions here.

The full essay is at "Essays on the Financial Crisis," available at Amazon. 

CEO Compensation: How Much Is Too Much?

From the previous year, the medium value of salaries, bonuses and long-term-incentive awards for the CEOs of 350 major American companies increased by 11% in 2010 to $9.3 million, according to the Hay Group.  Corporate net income increased by a medium of 17% and shareholders medium returns, including dividends, increased by 18 percent. Share prices also increased more than the CEO compensation. However, bonuses increased 19.7%, which is just barely more than the percentage increases in corporate profit and shareholder returns.

The full essay is at "CEO Compensation."

Rosemary's Baby: The Supernatural in Religion

The film narrative centers on Satan impregnating Rosemary, a married woman in New York City. According to Roman Polanski, the film’s director, the decisive point is actually that neither Rosemary in the film nor the film’s viewers can know whether it was the devil who impregnated her. Beyond the more matter of being able to distinguish a psychosis from a more “objective” or external religious event, the importance of the supernatural to religion is also, albeit subtly, in play, according to Polanski.

The full essay is at "Rosemary's Baby."

The Gospel According to Dr. Goebbels

“What does Christianity mean today? National Socialism is a religion. All we lack is a religious genius capable of uprooting outmoded religious practices and putting new ones in their place. We lack traditions and ritual. One day soon, National Socialism will be the religion of all Germans. My party is my church, and I believe . . . " From his diary on Oct 16, 1928.[1]

The full essay is at "The Gospel According to Dr. Goebbels."

1. “The Goebbels Experiment” (2005). 

The Essence of Leadership

According to DePree (1989, p.19), the first responsibility of a leader is to define reality. This might seem metaphysically esoteric, but I believe DePree hit the nail on the head. Even though far less has been written in leadership research about the importance of viewing reality and interpreting it than about traits, styles and situational factors, defining reality is the fundamental task distinguishing leadership as a phenomenon (Caldwell, Bischoff & Karri, 2002, p. 153).

 Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available at Amazon. 

Sources:

Caldwell, C, S.J. Bischoff, and R. Karri: 2002, “The Four Umpires: A Paradigm for Ethical Leadership,” Journal of Business Ethics 36, 153-163.

De Pree, M.: 1989, Leadership Is an Art (Doubleday: NY).

Industry Self-Regulation: Too Idealistic for Futures

At the time of MF Global’s collapse amid hundreds of millions of dollars in lost customer funds, commodities and futures trading had for decades been “largely policed by the exchanges where they trade, setting up a potential conflict of interest,” according to the New York Times. The paper continues by pointing out that those exchanges, including profit-making companies such as CME Group, the parent company of the Chicago and New York Mercantile Exchanges and the clearing house used by MF Global, “oversee the very futures firms they rely on for business.” The Times refers to this conflict of interest as one centered on industry self-regulation. 
 
The full essay is at Institutional Conflicts of Interest, available at Amazon.

The Market Mechanism: Complicit in E.U. Debt Crisis

According to The New York Times in late 2011, “How European sovereign debt became the new subprime is a story with many culprits, including governments that borrowed beyond their means, regulators who permitted banks to treat the bonds as risk-free and investors who for too long did not make much of a distinction between the bonds of troubled economies like Greece and Italy and those issued by the rock-solid Germany.” In going through these culprits and how they interrelated, it should not be lost that the market mechanism itself can be held as suspect, for at the very least it enabled the furtive games to be played for far too long. Indeed, the market itself did not do a good job for years in providing accurate risk-return relationships.

The full essay is in, "Essays on the E.U. Political Economy," available at Amazon. 

Decadent Management: Burger King Dethroned

When a major company like Borders or Pan American declares it is going out of business—bankruptcy being all too often just a way to force creditors and unions to renegotiate—the public is often stunned. Indeed even a week before such an announcement, managers can assure customers under the veneer of an expressionless face or even a comforting smile—that the company is focused on “driving strong expansion in its many markets around the world” and will “strongly position” its brand. Driving expansion? Strongly positioning? An astute person will instinctively detect the scripted, vacuous jargon as the patina of a rather strange, if conformist, mentality that presumes to invent or misuse words with impunity, as if from a superior position in society. The quoted expressions are from Miguel Piedra, a spokesperson of Burger King, reported in a Wall Street Journal piece on Wendy’s being “positioned” to replace “the King” as number two in sales. If Piedra’s bureaucratic response is not enough of a red-flag, a visit to a Burger King restaurant might give the impression of a company that—absent the cushions of name recognition and capital—is on the verge of going out of business.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available at Amazon.com.