We need to cure chronic "smartest guys in the room" syndrome.
Congress is holding hearings to find out how we got to the point of pushing for a $700 billion-plus bailout that has many people outraged and feeling as if they just got sucker-punched. Some of the tidbits coming out of these hearings absolutely nauseate me. It all reminds me of why our society simply has to stop excusing -- and in good times, idolizing -- selfish losers who display no trace of personal responsibility and accountability.
First of all, while Lehman Brothers' Dick Fuld did express some weak version of being "sorry," that sentiment doesn't seem to complement the rest of his testimony. First, there's the gist of the whining going on: Why didn't we get a bailout, too? Fannie Mae (NYSE: FNM ) and Freddie Mac (NYSE: FRE ) did, and so did AIG (NYSE: AIG ) ! And now, so's everybody else! Why are Goldman Sachs (NYSE: GS ) , Bank of America (NYSE: BAC ) , Morgan Stanley (NYSE: MS ) , and JPMorgan Chase (NYSE: JPM ) all still around? Why, God, why?!
Then there's the blame game. Fuld blamed rumors, short-sellers, and bad regulations for the company's demise. He left out poor decisions entirely. It's everybody else's fault.
"Special payments" are "special," all right
Check out some scary signs of entitled attitudes, to boot. Apparently, Lehman sought millions in "special payments" for several executives who were leaving -- even as it was pleading for government financial assistance. I don't know why these clowns just don't get that if you're dipping your hand into the public-funds cookie jar, nobody should be leaving with millions in "goodbye" pay.
Meanwhile, the Associated Press reported that some people at Lehman subsidiary Neuberger Berman suggested that executives could take pay cuts to "send a strong message to both employees and investors that top management is not shirking accountability for recent performance." Apparently, the very notion was viewed as absurd. George H. Walker, a member of Lehman's executive committee -- and President Bush's cousin -- was quoted as being "embarrassed" at the notion and said in an email, "Sorry, team. I am not sure what's in the water at" Neuberger Berman.
So, some sense of ethics and fair play means somebody's water's been laced with wacko juice? The implication just blows my mind.
Last but not least, Fuld himself was caught pooh-poohing the idea of conciliatory pay cuts. He said in an email on the topic: "Don't worry -- they are only people who think about their own pockets."
Um, yeah, I guess it takes one to know one, buddy.
AIG's CEOs have also taken their turn on the hot seat, with Hank Greenberg blaming subsequent CEOs, and those dudes pointing to mark-to-market accounting rules. Even worse, it came to light that after the government in effect nationalized AIG, executives went on a resort/spa retreat, living it up with spa treatments, banquets, and golf, to the tune of $440,000. I guess when your company just got bailed out by taxpayers, there's simply nothing for it but a pricey massage on the taxpayers' dime. You have got to be kidding me. (Please note that AIG has since clarified and defended the event, saying it was for independent agents, and only included 10 AIG employees, none of which were executives from AIG's headquarters. Still, any such lavish party thrown after the nationalization of a company would inevitably raise eyebrows, not to mention provide a bitter reminder of the high-rolling attitude that has been so prevalent.)
Bill Mann made a good point in his commentary "Sunset for Sociopaths": "Wall Street is full of people who would step over their grandma's body to grab another buck."
Indeed, check the definition of "antisocial personality disorder" from the Mayo Clinic, and peruse some of the symptoms, such as "indifference to the needs of others," as well as a "blatant disregard for what is right and wrong." I think we're seeing plenty of symptoms that could rightly get folded into the Diagnostic and Statistical Manual of Mental Disorders.
Getting over "smartest guys in the room" syndrome
This behavior is exactly what I railed about in my recent article "Trashing Milton Friedman." Our marketplace is screwed if ethics and fairness continue to be considered quaint, out of vogue, or even kind of nutty in business dealings. Fuld's flippant "pocket" comment really fries me, but he was kind of right in one sense: An awful lot of people have let short-term profits lull them into excusing all sorts of behavior. We all need to search within and remember that we are part of this equation, too. Shareholder activism and good corporate governance are ways we can start trying to push back, and we must begin in earnest. Rewarding bad behavior has to stop.
It's difficult to get over the sick feeling and the distinct impression that our culture learned nothing from Enron and WorldCom -- the "smartest guys in the room" syndrome (as coined by the 2005 movie on Enron by that name). Now we face a recession that will probably be extremely painful as we wring out the excesses that have built up in recent years. Maybe this time, we'll focus once again on the difference between honest success and greed, and why humility, personal responsibility, and accountability -- indeed, at times, shame for screwing up -- need to come back into style.