It was producing individuals, he said, who were “trained in the art of plunder in gentlemanly ways” and “imbued with the false ideal that the American way means exploitation.”
That chairman was William O. Douglas, and the year was 1937, the depths of the Great Depression. As related by the late Robert Sobel in his comprehensive work N.Y.S.E.: A History of the New York Stock Exchange, 1935-1975 , restoring confidence was the critical issue of the day for Wall Street and the nation.
Here we are again. The economy may be heating back up, and markets may have firmed, but there is once more a widespread feeling that the financial industry is dedicated to nothing so much as taking advantage of the public. It won’t be easy to overcome the recent legacy of bad behavior.
What is missing is a sense of leadership -- and of moral purpose in that leadership. Not the leadership of prosecutors and politicians but of industry executives who stand up for bedrock values -- honesty, openness, trust, a square deal -- and make clear to the public, and to their own employees, that they expect to conduct their business on such principles. What passes for leadership today is resignation: When caught out, CEOs resign -- as we are seeing all too frequently in the mutual fund industry -- often with a handsome retirement package.
There are voices in the wilderness, like Vanguard Group founder Jack Bogle, but ironically, the last Wall Street executive who could be called an industry leader may have been former NYSE chairman Dick Grasso, who did so much to rally the industry after September 11. Later, of course, we learned about his nearly $190 million retirement package -- as well as the $5 million bonus he pocketed for his good deeds after the terrorist attacks.
When the World Trade Center fell, there was a lot of talk in the U.S. and in its financial industry about defending a way of life and American values. Then, almost immediately, the Enron Corp. scandal broke. Since then there has been a flood of bad news: accounting fraud, tainted research, mutual fund shenanigans, foreign exchange cheating. Surely, chicanery, skullduggery and widespread breaches of fiduciary duty are not what we send soldiers into battle to defend.
America’s financial executives need to defend -- and once again advance -- their country’s core values. Are there any volunteers?
