Give a Billlion Dollars
Several of the nation's largest banks have recently announced a remarkably profitable second quarter. JPMorgan Chase earned $2.7 billion, Bank of America $3.2 billion, Goldman Sachs $3.4 billion, and Citigroup $4.3 billion.
We can all take heart because the banks' recoveries constitute very green shoots and because the U.S. rescue and stimulus plan seems to have worked.
With the banks' financial deficit erased with federal assistance, now is the time for their executives to also erase an enormous leadership deficit.
Public anger toward excessive risk and unwarranted pay is boiling. It appears to many that bank executives had not lived up to what should have been a first maxim of their leadership: to serve the institution and the society, not themselves. In fact, to many observers, it seems that precisely the opposite had prevailed: self first, mission last. How else can one explain annual pay in the many millions while companies like AIG and Merrill Lynch imploded?
To restore public confidence in the leadership of the nation's financial sector, here is a four-point proposal for doing so:
1) Each of the nation's 10 largest financial institutions donate $1 billion to a newly created "Banking Leadership Fund" (BLF), a non-profit foundation whose trustees would be appointed jointly by the American Bankers Association and the U.S. Treasury.
2) The BLF's website could identify 10 deserving recipients by gathering public preference through web-based polling.
3) The deserving recipients must be devoted to worthy public purpose with a financial focus, such as programs to foster innovative small-scale enterprise among disadvantaged groups in the U.S. and abroad.
4) All of the first-years contributions could be dispersed within twelve months, and the banks would be asked to "re-up" their contributions annually.
We can argue whether $1 billion is too high or two low, and over how it is best dispersed. Less arguable is the principle that this would be a wise strategic investment for all.
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