Posted On: Wednesday, April 28, 2010
The good news is that ethics was on the front burner April 27, 2010 when U.S. Senators grilled current and former Goldman Sachs executives about Goldman’s role in the financial crisis.
Questions about how Goldman resolves conflicts of interest, handles transparency, whether executives believe the firms’ incentives led to ethical behavior, what Goldman’s code of conduct is, and how executives view their ethical responsibility to clients were issues that senators kept raising, dissatisfied with the answers received.
The Tiffany reputation Goldman has built over 140 years took a beating during the nearly 11-hour hearing of the U.S. Senate Permanent Subcommittee on Investigations.
The most graphic anti-Goldman sentiment was expressed by protesters dressed in prison costumes, draped with crime scene tape, and carrying signs saying “Shame.” They paraded around the hearing room during brief recesses.
Seven current and former Goldman executives including CEO and Chairman Lloyd Blankfein testified, all reinforcing each others’ sentiments that Goldman had behaved appropriately, sidestepping questions about moral obligations, and disputing the facts in the SEC fraud charges.
The hearing exposed an abundance of red flags, some seemed unique to Goldman; others are industry wide. They include:
The televised hearing raised questions, many of which remain unanswered, evidence of the complexity facing legislators working on regulatory reform. However, the intense scrutiny Goldman faces takes the ethical issues identified in one Wall Street icon and illuminates industry-wide ethical issues.
Before Goldman’s next public testimony, whether in Congress or in court, it would be a good first step for them to be able to articulate what they mean by “integrity and honesty are at the heart of our business.” You can’t use what you can’t define.
Gael has proven to be a source of thoughtful and actionable advice on issues related to corporate culture and ethics. Her academic knowledge is a useful supplement to her practical experience and tailored advice.
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