An interesting link for you.
http://www.icahnreport.com/
‘The way CEOs become CEOs in America is a travesty. This is one of our major problems. I use the anti – Darwinian metaphor. The survival of the unfittest’.

Corporate Governance is as clear as daylight – its enshrined in the law of the land – its a regulatory mandatory Corporate requirement to comply (SOX, the Combined Code – and BASEL II etc) and it was introduced to protect us (the public) and Shareholders against Corporate Fraud and Abuse.

The problem seems to be that the regulatory, the Government, audit (internal and external), the Chancellor of the Exchequer – the opposition etc. etc. – were all asleep – nobody knew we have a banking crisis in the UK???? – and now they are collectively suffering from amnesia and have ‘forgotten’ they need to enforce the law they introduced to protect us from Corporate Abuse. Unless the law is enforced – by those that introduced it to protect us – it makes a farce of the law – and a fool out of those that thought they were protected.

So – the ‘real test’ of Government and regulatory integrity – will be to see what Directors and CEOs will be questioned ‘in the dock’ – and how will the judiciary system hold them to ‘account’ (as in ‘put in jail’). We know this is Corporate Abuse if not Fraud from C-level down. Yet nobody is taking legal action – and if those responsible to do so and entrusted to do so by the electorate don’t act – then you have to question why – and you have to wonder who will act.

The tax payer and shareholders as far as I can see are the only ones complaining – wanting legislative action – not just a ‘sorry’ – and even the tax payers anger has been slow in coming – I guess we were expecting to see Government legislative action – but instead we got the Select Committee enquiry – and we the tax payer got to bail out the banks as well!!

I don’t see anything to indicate there is any real ‘will’ on the part of the Government or the opposition to get to the bottom of this crisis – in real terms – to find who is to blame – and prosecute them.

Until that happens I too think the ‘credit crisis’ is indeed a ‘side show’ – the constant focus on the sympton (and not the problem) becomes a farce – whilst the credit crisis is undoubtedly real – you have to wonder if were are being bombared by it daily to distracted us from the main event – just too much noise.

The real test is legislative action. Its likely the US / Lehman shareholders will lead the way – But who do they sue? As a new shareholder (UK tax payer) in the UK Nationalised banks – I wouldn’t even know where to start. What law is there to protect our tax payers £s. and what are our rights are shareholders? As a shareholder surely we had a right to vote??

Where banks have been protected – investment shareholders have been protected – but the tax payer is the new victim (again) and not only the effective insurer – its our money – but we now also own the toxic debt (and not the assets). How did this happen without our consent?

I do think though that investment shareholders need to realise what role they took in supporting Corporate Greed. They had rights – they had responsabilities too. How did they justify £million bonuses. When you look at RBS and HBOS C-level – its astonishing to realise that none of the top 4 exec. had a single banking qualification amongst them. Who supported these appointments?

If Directors are not held to account – ‘accountability’ and ‘integrity’ are token words – words to apease and no more. The years and years of mis management – coverups – deceipt – bullying – have real consequence – but the victims is the one paying the price – not only the price of losing jobs, homes, pensions – but also we are paying the bill – the bailout – the insurance – and we now own toxic debt.
And yet we are not even asked to vote – we don’t know our rights – we have no means of holding those that caused this to account.

The City these days has a lot to answer for – it used to be the ‘old boys’ club – but the rules of integrity existed albeit they were simple – ‘chaps don’t cheat on chaps’. It appears to have worked – but then again that was when banks were being run by bankers. Nowadays – in a few banks – you would be hard pressed to find the professional banker / ‘gentleman’. The behaviour is often more like thugs and bullies – toxic management – hire and fire – fear brigade. For the last 15 years everyone that worked in banking knows that if you blew the whistle on the banks that your banking career was over – you would be discredited forever – and would never work in the City again (for some banks – not all). So you may well wonder where the integrity has gone – its been bought by £M bonuses – and those with integrity have left.

Look at the collapse of Barings – Liam Neilson ended up in jail – and every Director got a huge £M bonus from the merger and continued to work in banking without a blemish on their character. Traders in the City run their own book – they are personally held to account for any failure – until the rules are changed – and the Stock Exchange holds the Bank / BOard of Directors to account – there will always be a scapegoat in the world of banking – and Directors will continue to get away with Corporate negligence.

Northern Rock, RBS and HBOS exec. have gotten away with it so far – it seem ‘sorry’ is the price you have to pay in front of the Select Committee. If you think about it there were 2 enquiries into the Jonathan Ross and Russell Brand radio catastrophy – 2 resignations – 1 suspension etc – yet the entire banking world is on its knees – as is the world economy – and not an enquiry of any substance in sight. You have to wonder what is going on – and where the integrity is in any of it???

The FSA under BASEL II had regulated that all banks must be BASEL II compliant by 2004 – if they were compliant – which was mandatory – then Banking Credit issues would not have emerged – the shareholders investment would have been protected – as would the liquidity of the banks. So why don’t we hear any politician – or the FSA – or the Treasury talking about non-compliance with BASEL II accord which was mandatory for all banks to be compliant by 2004 – nobody is speaking about that – why ever not!!!

The Bank of England – has been warning as far back as 2002/3 – it was in the press weekly – of the BoEs concern that the level of borrowing in the UK was out of control (personal unsecured debt has surpassed £Trillion). Mervyn King also warned – time and time again – that the rapid growth in the UK housing market (30%+ p.a) was unsustainable back in 2003. He said that if the markets did not correct themselves in a controlled way – that a dramatic correction was inevitable. Yet banks went on lending – housing prices went mad – people kept on borrowing – sometimes 10 times their salary – and now everyone wants to know how it all went wrong. Northern Rock offered a 100% mortage for people with No Income and No Assets (UK subprime surely). The collapse of the UK housing market has been a long time coming – and the collapse of Northern Rock, HBOS and RBS had everything to do with poor management – reckless business models – and a will to cover up these losses – and take more and more risk to hide the problem. Independent Financail Advisors, Mortgage Lenders, greedly estate agents, and greedy developers have a lot to answer for too. The banking sector is not the only sector that is broken.

Currently the systemmatic application of altruism to polities prescribes the law that and the system in place. What fundamental question are these politicians avoiding to answer: At who’s expense?

Avoiding the answer to this question comes from leadership’s lack of integrity. For if they did, they would identify the underbelly of their ideas: too many people want to live at the expense of others. And the truly devious ones want to harness the power of the government to do it for them. Laws and regulations against the US banking industry for almost its entire history is the result.

Altruism is not just a pretext, it is the goal.

I leave the readers with a quote from Auguste Comte (who coined the term):

“The social point of view cannot tolerate the notion of rights, for such notion rests on individualism. …. This ["to live for others"], the definitive formula of human morality, gives a direct sanction exclusively to our instincts of benevolence, the common source of happiness and duty. [Man must serve] Humanity, whose we are entirely.”

(Comte, August. Catechisme positiviste – 1852)

Sounds peachy… but answering the question “At who’s expense?” we see that altruism is a package deal equating the good with the giving up values (of in individuals right to his own life – the values that support it).

Integrity, as defined above, cannot survive consistently in a mixed-market (altruistic) system.

Change the system by a re-discovery and re-formulation of better ideas.

Cheers,

-Cory

http://www.aynrand.org/site/PageServer?pagename=reg_ls_financial_crisis

Cheers,
-Cory

thanks for taking so much time to share your views so well, much appreciated. I appreciate the Deming reminder about tampering. In the context of my piece though, I am concerned about the fundamental lack of integrity of too many individuals in the financial and political spheres. For sure there are other factors but integrity appears off the radar at the moment, which is why I shouted.