Q: Goldman Sachs, the country's most successful investment bank, is under fire for helping a hedge-fund tycoon dump bad investments on unsuspecting customers and then betting against them. CEO Lloyd Blankfein says the firm did everything it was legally required to. Are ethical issues relevant as a business seeks to earn money for its investors? Does the little guy stand a chance in such an environment?
In view of the ultimate goals of corporations, it is highly unlikely that the interest of the customers is the final consideration. Instead, it is the shareholders who are to be pleased.
It is nice to hear that Mr. Blankfein and his firm "did everything that they were legally required to do," but such a statement does not mean that they acted in the best interest of the customer. If this is in fact true, the firm was able, within legal limits (ignoring moral and ethical issues), to deceive its customers. Now we all know too well the price that we and the rest of the world have paid as the result of their "legal" manunipulations.
These" legal manipulations" are at such a sophisticated level that I doubt seriously that the "little guy" would stand a chance of understanding what is being done. It therefore becomes imperative that there is governmental oversight of these large (and small) financial institutions.
In this capitalistic culture of ours, we are in most cases defenseless against having our hard-earned savings and properties completely wiped out as a result of corporate greed. Even though many customers lost money, there was enough " cashing out" from folks on the inside who knew what was going on, that many of the companies received large profits during the financial downfall.
We must also be protected from our own greed. Before the recent financial meltdown, many of us were doing well. People were buying homes that they could not afford and living on credit-card debt that they could never repay. In such a climate, even though the system had basic flaws, not many of us asked many questions.
A good example, at a much higher level of customer greed, was the recent Madoff scheme. His scheme went on for many years and during that time some folks got great returns and simply looked the other way when they realized all the money they were making. Only when the scheme broke down and folks lost their life savings was there an uproar -- even from the the oversight folks.
For the "little guy," some of this can avoided by following the rules of investment -- try to have a balaced portfollio and avoid placing all your money in risky investments. If it's too good to be true, it probably isn't.
I realize that there are a lot of folks who feel that the government should stay out of our private business but this is one instance where governmental intervention in the form of oversight is greatly needed. It may be the only agency that can protect citizens from outright abuse of corporate greed.
Ethical issues are very relevant as financial corporations seek to get the greatest profits for their investors. As we can see from this incident with Goldman Sachs, we cannot depend on corporations alone to hold to ethical standards. They must be required to do so by oversight with teeth.
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