Last weekend I accompanied my significant other to his business school reunion at Wharton. During one of the “Thought Leader” breakout sessions, we learned from Prof. Don Huesman, director of the Wharton Innovation Group, that immediately following the 2008 meltdown, the faculty met and posed the question: “Are we responsible or are we irrelevant?”
Given Wall Street’s failure to properly analyze and assess risk, Wharton, as one of the top business schools in the country, decided to go with the assumption that it bore some responsibility. As such, they’ve been revising the curriculum to ensure that future graduates are better prepared and more responsible.
As we sat outside Jon M. Huntsman Hall, I mentioned to boyfriend how impressed I was that unlike the wider business community, the school appeared to have used the 2008 debacle as an opportunity for introspection and accountability.
He laughed. A graduate of the Class of ‘92, he entered when Wharton was clouded by the indictment of one of the school’s best-known graduates — Michael Milken, the “Junk Bond King” of the 80’s — on 98 charges of racketeering and fraud. Milken’s indictment, combined with other mismanagement, sent the firm of Drexel Burnham Lambert, where Milken headed the high-yield department, into Chapter 11 a year later.
At the time of the bankruptcy, more than 5,000 employees lost their jobs. Milken served only two years of a 10-year prison sentence.
When my boyfriend started at Wharton, a hastily arranged ethics course had been added to the curriculum in response to the Milken affair, scheduled opposite the Thursday afternoon pub hour. This was a temporary fix until the faculty could build ethics into the curriculum on a more permanent basis.
I now share my my boyfriend’s cynicism after going to the school’s website and finding that Milken is lauded as one of the 125 Influential People and Ideas celebrating the inception of the business school.
According to the school’s own PR, since being founded it “has graduated nearly 100,000 business leaders.” Out of all those high-powered successful people they couldn’t find one to replace the guy who served jailtime for fraud and racketeering? Perhaps even more disturbing, in Milken’s profile, they’ve white-washed his crime to one mild and ambiguous sentence: “Milken became a magnet for controversy in the late 1980s.”
Is it any wonder that graduates — not to mention the rest of us — get a mixed message? If we’re talking risk/reward, what are 98 counts of fraud and racketeering if you’re only going to spend 22 months in prison, walk away with $700 million, and come away with your alma mater lauding you as one of its stellar alumni? Gordon Gekko is alive and well and living in America, folks.
It was an interesting time to be contemplating this because yet another bank, this time JP Morgan Chase, had just lost more than $3 billion on a large position taken by what was supposed to be its risk mitigation unit.
Chase’s CEO, Jamie Dimon, has been an outspoken critic of the proposed Volcker Rule of the Dodd-Frank Act, which restricts proprietary trading by banks with federally insured deposits, even going so far as to say that “Volcker doesn’t understand capital markets.” He met with Treasury Secretary Timothy Geithner on March 6 to discuss the issue, according to records recently released after prompting by the Sunlight Foundation. Dimon is also one of the three bankers who sit on the Board of the New York Federal Reserve Board, the organization that allegedly supervises the banks.
Why do we continue to let the foxes guard the henhouse?
Thanks to the Supreme Court’s disastrous Citizen United decision, money speaks louder than ever in the political process. If we are not a complete plutocracy yet, we are well on the way. If legislatures continue to pass laws restricting votes, the poor and disadvantaged will lose their only voice.
Both parties have their snouts in the trough, but if we don’t want to see more of the same, we have to pin down our 2012 candidates. Like most voters without multiple zeros in their bank account, I’m sick to death of “meet the new boss, same as the old boss” politics.