HuffPo: Time to Re-regulate Business
Writing in Huffington Post, Hale “Bonddad” Stewart makes a compelling case that business practices need immediate attention––NOW.
From contaminated meat to toxic toys, Stewart attacks multiple industries.
And the subprime mortgage crisis, he says, could have been avoided easily if regulators had bothered to pay attention to numerous warnings over many years:
Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices” and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.
And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.
Let’s remember the business climate in 2001. A long period of economic growth had crested, business scandals were being exposed everywhere, the economy was heading downward–and plummeted later that year, in the aftermath of 9/11.
If ever there was a time when it made sense to look at risky lending practices and a baseless assumption of permanent housing price spirals, that would have been the time.
So why did Greenspan ignore all the warnings?
–> In my writing, and particularly my award-winning sixth book, Principled Profit: Marketing That Puts People First, I repeatedly demonstrate that business ethics is more profitable. Don’t know why this lesson is so hard for some of the “mainstream” players to learn. Wouldn’t it be nice if they all had a conversion and started signing (and taking seriously) the Business Ethics Pledge, in droves?