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Board of Health Condemns Due to Moral Hazards

Posted by Larry Doyle on April 13, 2009 11:05 AM |

danger-toxic-hazardThe best organizations are managed not only for today but for tomorrow. What do I mean by that?  Great organizations assess risks, develop talent, diversify products, and grow market share. Aside from those basic business tenets, the best organizations respond well in times of crisis. 

Every business and organization is ultimately a reflection of its people. To that end, the depth and quality of the people are the single greatest factors in the long term success of the organization. 

Any individual or organization would relish developing a system that generates untold success and then automates the process. Neither business nor life works that way. Change is constant. How organizations proactively stay ahead of change and respond to change is paramount in succeeding in business and life.

The best sports organizations have developed a deep bench of talent both on and off the field. When players or executives leave – as they always do – the general manager moves another body in and the team does not miss a beat. The same scenario occurs in the best companies. This transition process is part of the culture of the organization. 

Regrettably, we do not have enough change in the halls of Congress. The power of incumbency has created an odor due to the stagnation in key personnel turnover. The same stagnation is prevalent at many weak organizations.  As a result, a strong “bench” with the ability to adapt is lacking. 

What happens when an organization such as the federal government intersects with failed or failing enterprises also without a deep bench? The failed approach is multiplied. Welcome to the world of finance 2009. 

With all due respect, the best people want to work for the best organizations. Failed enterprises (Citi, AIG, Freddie, Fannie, GM, Chrysler) have not developed a culture which attracts the depth and breadth of talent necessary to adapt to change. Additionally, failed policies are not scrapped but are managed. Failure begets failure.  

Attracting qualified executives into these organizations to manage businesses that are for sale or on life support is extremely difficult.  Secretary Geithner asserts in an FT article, U.S. Prepared to Oust Bank Chiefs:

Tim Geithner warned on Sunday that the US government would consider ousting board members at American banks as a condition for giving the institutions “exceptional” assistance in the future.

The Treasury secretary said the Obama administration would be prepared to force out senior management to protect US taxpayers, and ensure accountability, as a condition for providing money to help banks restructure. “If, in the future, banks need exceptional assistance in order to get through this, then we’ll make sure that assistance comes with conditions,” Mr Geithner told CBS television.

While I have no interest in supporting executives or boards that have literally driven their companies and our economy into the ditch, I also have little interest in supporting government officials and regulatory bodies that were in the passenger seat at the time. 

While Turbo-Tim and Barack are polishing up the Under New Management” signs, I wonder if we might be better off calling in the Board of Health and shutting them down. How about Condemned: Filled with Toxic Assets. On the other side of the building we should tack up, STAY AWAY: MORAL HAZARD!!”

Another name for this process . . . Capitalism.


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