The economic collapse of October 2008 was neither an accident nor a simple matter of recklessness and greed. William Black, the former senior deputy counsel at the federal Office of Thrift Supervision, has thoroughly documented the epidemic of mortgage loan fraud, accounting fraud and credit rating fraud that was ultimately responsible for the global banking collapse. According to Black the mortgage lenders, the banks who created the credit swaps, collateralized debt obligations and other derivatives, the banks who bought them and the credit agencies who rated their financial risk all knew it was happening and conspired to conceal it from borrowers and investors. It turns out many of the federal and state regulators who were supposedly monitoring these companies also knew exactly what was going on.
In most cases these companies continue to be run by the same boards and corporate executives. Why these people got a five trillion bailout instead of going to jail for this Enron on steroids is beyond me. Meanwhile most of the regulators were promoted and presently either work for the Obama administration or the Federal Reserve.
The SEC’s New Diversity Rules
Learning the Security and Exchange Commission (SEC) is filing a civil suit against Goldman Sachs for misleading their investors was good news. Less well publicized are the new diversity rules the SEC has introduced for the 2010 proxies corporations send out to shareholders. The rules, which propose to address Wall Street’s malignant “don’t ask, don’t tell” culture, require companies to disclose to shareholders that they have considered diversity when selecting candidates for board positions.
I strongly suspect this move was influenced by Norway’s 2003 law, which has been copied in several other European countries, requiring that corporate boards be 40% female (actually the law requires 33-50% representation by both sexes – in a few cases companies have been required to recruit additional male board members).
Why
Interestingly the arguments for implementing
Another major impetus for the law were theoretical and empirical studies showing that diversity promotes innovation and resilience by broadening the range of debate. A number of European leaders (in government and business) recognized as far back as the late nineties that Peak Oil and pressure to reduce carbon emissions posed very serious challenges for the corporate world. They were also far-sighted enough to see that diversity-based resilience and innovation would be essential in finding the drastic solutions that were required.
Many saw the example of the
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