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Our Turn: Time to get serious about business ethics

The media is filled with the seemingly never-ending games of financial fraud and scandal. We continue to witness a basic lack of ethical standards, the end result of which translates into higher consumer costs, economic ruin, cynicism, and most assuredly a lack of confidence in our business sector, government and society generally. And despite all of this, nothing is being done to train citizens and future business leaders concerning the simple task of proper behavior.

This is playground stuff: Learn to play by the rules and, where rules don’t exist, act appropriately. Why is it so hard for those of us in business suits to remember what our schoolmates and playground monitors taught us?

In 2002, the New Hampshire Securities Bureau reached a $5 million agreement with Tyco Corp. concerning its alleged corporate malfeasance. At that time, the settlement was one of the largest securities settlements in the nation’s history. The funds have since been dedicated to establishing programs within higher education in the state for the advancement of ethical standards in both the private and public sectors.

Just days ago it was announced JP Morgan will be ponying up $13 billion to state and federal regulators to address its mortgage dealings failures. It has been estimated the remaining level of legal exposure by the largest U.S. financial institutions could result in the settlement total for alleged mortgage fraud in the United States to be in excess of $100 billion. It is now evident 2013 will likely be the high-water mark toward addressing the responsibility of the financial-crisis era of the first decade of this century, a period resulting in two major economic slowdowns, all because of ethical lapses in our financial markets. Both periods resulted in congressional action to address regulatory shortcomings (Sarbanes-Oxley in 2002 and Dodd-Frank in 2010).

Unfortunately, no action has been taken to address the ethical behavior breakdown in our country and how such behavior not only diminishes society but damages our economy as well our very way of life. No national effort has been crafted to teach that greed is not good. Now is the time to take stock of why ethics matters. We need to get America’s future business and community leaders thinking about ethical behavior and what it means in terms of responsibility and accountability.

American entrepreneurialism and government support for it has created the most dynamic country in world history. This dynamism has also produced unparalleled growth and economic opportunity.

However, the recent past also shows that unlawful and unethical behavior left unchecked can result in moral breakdown and economic self-destruction. We must instill a sense of citizenship and personal responsibility across society.

Financial fraud settlement funds are not government budgeted money per se or even taxpayer dollars but instead are used to fund further government fraud mitigation programs as well as benefit the general treasury of government. However, none of the national financial fraud funds has been targeted to address the importance of personal responsibility and ethical conduct.

We propose the Congress direct a small portion of settlement funds to a dedicated national educational ethics program.

We come to this notion as a former securities regulator and private equity manager of troubled and fraudulent funds. Such a program can be guided and administered by the recently established Consumer Financial Protection Bureau so as to promote ethics and ethical curricula within post-secondary education institutions, including professional graduate schools, as well as teaching the importance of ethical obligations in primary and secondary education.

Our proposal offers the following guidelines for consideration:

1. a nonpartisan panel of educational, financial, consumer and business experts be established to propose how best to implement such a program;

2. any program is to be free of all ideological or political bias;

3. the panel’s work to be funded by an appropriation from financial fraud settlement funds; and

4. the award of any funds for the teaching of ethics in curricula is to be on a voluntary basis.

Funds could also be used in concert to leverage the few already established ethics education programs in the nation.

The basic premise of our proposal is a correlation between the fact that fraudulent behavior causes the literal diminution of the world economy and a modest part of the financial fraud settlement funds be utilized to address the root cause of the matter.

Doing nothing will mean no real change.

Consider that the settlement funds derived during 2002-03 for financial fraud did nothing to affect the course or impact of the much more severe 2007-10 financial crisis.

It is time to act now and teach future generations that ethics matter, if only to diminish future economic blowups.

Business can be rough at times, but it will be a better playground if we stop the endless games. Extending the lessons on how to play fair will be a boon to us all.

(Mark Connolly is the former New Hampshire director of securities regulation and principal of New Castle Investment Advisors. Mark DiSalvo is CEO of Semaphore, a leading global provider of private equity funds-under-management.)

Legacy Comments35

Only Republicans think Reagan was a good President. He sold arms to the Iranians after they took American citizens hostage and used the money to prop up right wing dictators in So. America. These arms were used against our troops in the middle east. . His own party voted to override his veto that banned cutting off aid to So Africa. He was President when 240 marines were killed while sleeping in Lebanon that had not been properly guarded in a dangerous war zone. And this was only foreign policy. In his first term we had 18% inflation and his trickle down economy has brought us income equality and has even been condemned by the Pope. Reagan is all the Republicans have, I notice they conveniently overlook the two most recent Republican presidents. Can't brag much about Nixon or Herbert Hoover and Eisenhower was too moderate for them.

"Only Republicans think Reagan was a good President." I submit, that is the most untrue statement ever. The 1984 presidential election proves it beyond any doubt. One for the history books.

The key word is "was". This was a supposed "poll" saying Reagan was the best President ever not at the time he was elected. Nixon also had an overwhelming victory in '72, but he resigned in disgrace. Some Presidents who just squeaked by, are now rated very high in public opinion. Kennedy for one.

By the way how many "most untrue statement ever" do you have? I thought Obama had already crossed that threshold for you?

bet you cant even name the most recent lie Obama told - yet it is all over the google thingy.

Doesn't matter, GWTW has already posted what it the "most untrue statement ever" and no one on your right wing web sites can beat that. .By the way this is called satire. Goggle that.

This NObama administration is doing a Jessie Jackson style shakedown. If there was any wrong doing wouldn’t you think somebody would be going to prison? NOPE - on Page 5 of “Annex 2″ of the consent order: The Justice Department mandates that JPMorgan give $$$$ BILLIONS to nonprofit groups that finance Acorn clones and other shakedown groups..... this is nothing more than a shakedown distributing money to people who support the administration’s SOCIALIST agenda.

This post distorts the facts while it raises the specter of a right-wing bogeyman--ACORN-- that doesn't exist (and that right-wing fear mongering turned into an existential threat rivaling Al Qaeda). $13 billion is a fair chunk of change to fork over for "no wrong doing", but a mere slap on the wrist from an administration that the poster claims is pursuing a "SOCIALIST" agenda, but is in fact, like the previous administration, joined at the hip to Wall St finance. "JPMorgan has agreed to make payments under the Making Home Affordable Program and the Home Affordable Modification Program, two Obama administration programs designed to get low-income families into home mortgages. The programs assist low-income families with mortgage loan forgiveness, loan modification agreement payments and targeted mortgage obligations to 'relieve urban blight.' However, if by Dec. 31, 2017, JPMorgan has not paid out the full $4 billion, then the Holder Justice Department will require the bank to pay “liquidated damages in the amount of the shortfall to NeighborWorks America.” "NeighborWorks American" is apparently the "Acorn clone" the poster has bunched his panties about. Note that this requirement only applies if JPM has not paid out the full $4 billion over the next 4 years. From their website: "NeighborWorks America is one of the country’s preeminent leaders in affordable housing and community development. We work to create opportunities for lower-income people to live in affordable homes in safe, sustainable neighborhoods that are healthy places for families to grow. Headquartered in Washington, DC, NeighborWorks America operates through seven regional offices and one national office." Readers can decide for themselves whether this organization is intent on "sapping our vital fluids", as the poster's hysterics suggest, or embodies some of our nation's best aspirations and hopes.

Safe? As is Detroit? Los Angeles? New Orleans? Harlem? Chicago's East Side? etc.

You should get out more. One could be forgiven for thinking that your gratuitous comment had an element of racism attached to it.

NeighborWorks America is about a $300 million dollar operation, funded 90% by US government. They claim a loose affiliation with 235 local organizations, including CATCH Neighborhood Housing here in Concord. I’ve had experience with CATCH''s first time home buyer class, and recommend it. Nothing particularly political about them; I consider them to be an asset to our community.

would you like us to document the 100's of liberal scam programs that are not like Catch?

Please do, since your standards for "documented" facts blur the line between truth and fiction on a regular basis.

your standard for posting is the Sal Alynsky policy of personal destruction mixed in with your daily dose of socialism. As for truth - when you come back from the far far left realm of the discredited Globull warming alarmist religion then you can talk about truth

"devastating financial collapse that Bush policies helped cause"..Name them...and remember...Bush was not the first president, and history did not begin in 2001....LOL!!

If you disagree with my statement that Bush policies helped cause the financial meltdown and Great Recession, feel free to post your objections. He was, after all, president when the collapse occurred, and responsible for the policies initiated and continued during his administration.

I share your horror at the depth to which ethical standards have fallen. However, it would surely be the height of chutzpah for this government to presume to teach business something about ethics. This administration has demonstrated a complete lack of honesty since its inception. We are living through the takeover of 1/6 of the economy, sold to the public based on persistent deceptions and misrepresentations by the president and the ruling party, all done for political gain. We’ve observed the aftermath of a terrorist attack in Benghazi, where we can review the discussion between government agencies about how to report the incident. Whatever your political view, a review of the published emails reveal that the only option that was not considered was telling the truth. We have an IRS that flagrantly persecuted what were perceived to be the political enemies of the president. For any one of these actions a business would be found guilty of fraud, and fined or jailed. Yet, for none of these did the Department of Justice even investigate, much less demand accountability. Yes, let’s have some instruction in ethics. And let’s start in the government.


Your letter contains its own fair share of chutzpah, in its partisan conflating of fact and opinion on the 3 issues you mention. From inaccurately describing the ACA as a "takeover of 1/6 of the economy..." to your implication that facts on the Benghazi terror attack are being hidden, to the alleged "persecution" by the IRS of groups skirting the laws on political activities by charitable organizations. Business ethics was the topic of the article--the lack of which contributed mightily to the Great Recession--but you chose to play the same anti-Obama song Republicans have sung since 2008. The Obama presidency has been a disappointment in many ways, and there is ample fodder for complaint without distorting the record. In several ways it has continued the policies of the previous administration, including giving a pass to Wall St, and maintaining and enlarging NSA policies. Bush2 is the presidency which historians are likely to judge as one of the worst ever--which fact seems to drive much of the criticism of Obama--it's payback only with less substance to it. Obama was saddled with cleaning up big messes that included 2 misbegotten wars AND bringing the economy back from a devastating financial collapse that Bush policies helped cause. Meanwhile, the underlying cause of ethical failures, and the root of much of our current partisan gridlock, is the extent to which big money has corrupted our political system. The revolving door between government and finance, the dependence by both parties on big-money donors, the power of lobbyists--overwhelmingly corporate rather than public interest, the gerrymandering of congressional districts, the TBTF banks, all reflect the power of big money interests to unduly influence government at the expense of the public interest. The very concept of 'public interest' is routinely sneered at and mocked by conservatives, who do their level best to render it an obsolete notion, thanks to such 'reforms' as deregulation, abolishing the Fairness Doctrine, endowing corporations with free speech rights, and soon perhaps, with religious freedom rights. Your post doesn't quite rise to the level of 'making something from nothing', but it comes close. And it serves to divert us from the many real problems the nation faces, which neither party is willing to address so long as the tide of corporate money continues to wash over D.C.

I am not sure which is more disturbing, the fact the business and political ethics are at an all time low or that you actually believe what you write. A couple points are valid but the rest happened before our very eyes and the fact that you can spin and interpret them and then believe your own rhetoric is amazing and disturbing at the same time.

Funny... I wrote this in direct response to what I regarded as a disingenuous piece of "spin" of the sort that you and the other Carp Per Diem brigade spout here routinely. Feel free to respond with facts, if you find my post so "disturbing".

As usual with Brucies posts....Here is 1 "inaccuracy' in the many... " New Poll: Reagan Ranked Greatest President Of Last Hundred Years; Guess Who’s the Biggest Failure? " - dare you to google it.

Which right wing blog will we find these polls on? Is it the same ones that said Romney was going to win?

Oh Please enough with the phoney polls. Yougov ran this bit of tripe with a pool of 1000 panel members. A panel member is anyone that signs up to the website and agrees to participate in polls in exchange for "prizes". About as objective as the Iowa Straw Poll. Besides we all can thank Ronnie "zap" Raygun for trickle down economics. But he was very personable and as such popular but not for his policies.

how is that Trickle up NObama economy working for ya?

You obvious and constant UN-American, closed minded, lockstep march towards Socialism. My guess would be that an educated person would be able to see the forest for the trees, but then again................................

What on earth are you talking about? Un American because I didn't like Ronnie. How does that make someone more un American than those that spout hate against our present democratically elected president. Whom by the way I am not fond of either. Your are correct someone's education is in question, but I will actually go out on a limb and based on your reply to my post regarding, Sail's poll. Do they offer a ged for grade school??? If necessary I will pay for you.

Duly noted: In response to GCarson's pointing out the flaws in the sample selection for sail's "poll", and daring to criticize St. Ronnie, a post that name-calls and impugns his patriotism. And this from the poster who just a short while ago was complaining about "name-calling".

you naied it on the head tbransco! But expect the spin meisters to come along and blame Bush and Republicans and Reagan. They can NEVER admit when they are wrong and they will NEVER find anything wrong with Obama. Oh, the latest, flying in the face of what Obama wrote in his books, he did indeed know and "live with" uncle Omar. How many lies can this man tell and still have sycophants follow him as if he is the Pied Piper. They are in a denial trance.

As for the outrage over the supposed take over of 1/6 of the economy, perhaps that would not have been necessary if not for the unethical actions of the Health/Ins. industry. I think two lines from CCR's Fortunate Son say it all - "And when you ask them, "How much should we give?" Ooh, they only answer More! more! more! yoh," The healthcare cartel in a nut shell.

So you think that every time someone feels an industry is "unethical" in the opinion of the party in power that we should take over that industry? My guess is that you really don't understand how insurance works. You give them a little and if disaster strikes, they pay alot. Insurance is not about covering every little expense. Spending on nsurance does not give individuals immediate gratification but it is a responsible choice. Medicare denies as may claims as insurance companies, BTW.

So there is no confusion here. It is only the democrats that think there is a problem with the Ins/Health industries. We have the most expensive healthcare costs inn the world. Prior to Obamacare if you had a pre-existing condition you were effectively screwed or that approx 60% of personal bankruptcies in the US are the direct result of medical bills. The average annual cost of health insurance premiums ( not catastrophic ) in the US is just over $16000.00. or $7.70 an hour for a 40 hour week. So that is ok with you, right. Besides I didn't choose the whole taking over of 1/6 of the economy,I was using someone else's entirely false descriptor. Nobody has taken over the healthcare industry, just trying to change how to best pay for it, What we have had has proven to be a total failure with no desire to change business as usual approach. One other point, I do know full well about how insurance works, thank you. I just question why medical procedures have gotten as expensive as they have. Insurance companies have enabled hospital to raise costs with little consequence. I stick by my more, more, more comment.

No problem with subsidizing pre-existing conditions a bit. But employer paid insurance (89% of all plans out there) are not $16,000. My plan, for instance, before Obamacare was a 75% employer paid policy. It was $251 for a family of four per month so about $12,000. The preson working 40 hours per week is paying $1.60 per hour for a 40 hour week. Even if your portion was $500 it would be $3.25 per hour for a 40 hour week. Small price to pay for healthcare.

We have the most expensive education in the world - it is a total failure - run by the business as usual liberal unions with no desire for change - maybe we should scrap public schools...ever wonder why democrats always want someone else to pay for things?

Not meant for you, I was addressing Bruce but this fell under your comment for some strange reason.

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