Moral Lines in Business

Across Europe and America – the epicenters of the economic meltdowns – politicians are trying to “invent” legislation to prevent another financial meltdown. Is it possible to prevent another financial meltdown by making new laws?

Many believe whatever is done in business is correct as long as you make money. When you make money by treating others unfairly, the problem is not law itself – but the way we treat each other.

Of course there needs to be laws outlining business behavior:

The way we financially account for our business. This was a major issue in the last financial meltdown – banks and other financial institutions were allowed to bury their most toxic assets “off of the books”;

Rules relating to disclosure of elements of products being sold. This is what American investment bank Goldman Sachs when the American Securities and Exchange Commission which protects investors, maintains fair, orderly, and efficient markets, and facilitates capital formation. Already, private lawsuits have been filed against Goldman Sachs, UBS, Morgan Stanley, Merrill Lynch and Deutsche Bank alleging they misled investors.

Proper methods of doing business such as expected conduct of both parties doing business.

The way we treat employees with regard to safety and health.

As businesses' job is to make money, ensuring business does not endanger the health of others – or cause unnecessary degradation of the environment for future generations.

Laws are always behind business innovation. Business starts doing the new activity, gets in trouble, and then governments create laws to prevent re-occurrence. The economic meltdown beginning in 2007 was a product of actions that had been going on for decades.

These poor business actions began slowly. One business, seeing another business doing it and profiting, would also do it. Although some do question whether these new business actions would lead to serious consequences – no one can prove these actions would have lead to any failures, and the business doing these actions can prove they are profitable.

In the United States, President Obama is attempting to get the financial industry to help him make reforms to prevent another situation where the global financial system destabilizes the world economy again. Here are bits of several speeches to Wall Street where President Obama stated:

“Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's. So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”

“That's why we need strong rules of the road to guard against the kind of systemic risks we have seen. And we have a responsibility to write and enforce these rules to protect consumers of financial products, taxpayers, and our economy as a whole. Yes, they must be developed in a way that does not stifle innovation and enterprise. And we want to work with the financial industry to achieve that end. But the old ways that led to this crisis cannot stand. And to the extent that some have so readily returned to them underscores the need for change and change now. History cannot be allowed to repeat itself.”

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