“My View” from the July 13, 2012, edition of “Viewpoint with Eliot Spitzer.”
Let’s just list the week’s carnage on the Wall Street fraud front:
- Libor investigations ensnare almost all the major banks — estimates of damages of more than $20 billion are front page in leading papers;
- JPMorgan Chase now says its London derivatives trades cost nearly $6 billion in losses — and were a major failing in oversight and management;
- HSBC admits massive failures that resulted in permitting money laundering of huge sums of illegal dollars;
- Wells Fargo admits it discriminated in issuance of mortgages, charging minorities more than it should have.
And this is just one week.
And how does Wall Street respond? By refusing to admit there’s a problem — by clinging to power and by frantically dodging blame.
And not to personalize it, but executives whom I prosecuted still claim I did it because — get this — I just didn’t like them. Even though their companies threw them out after the charges were proven and their companies have had to pay billions in settlements.
What to make of all of this?
Wall Street has the same mentality as the Penn State leadership: Brush things aside, ignore first principles, avoid the tough ethical choices, go for the short-term win while protecting the cash cow.
And this attitude has been corrosive over time to the ethic of our economy and the trust that should undergird our financial sector.
We need a fresh start, new leaders. The current crop have failed across the board. Just as we every now and again vote out the entire political leadership, now is a good time to say to the folks on Wall Street, “Bring in a new team.”
There is something honorable about the Japanese approach: When something goes wrong, the leader steps aside. But we’re not the Japanese. Corporate leaders in America have shown time and time again, they do not possess that same sense of honor.
A leadership change will have to be forced — like they did at Penn State, like England is doing with its banking leaders, like shareholders could do with the companies they own and like the U.S. government has to do sometimes for the health of our economy.
That’s “My View.”