James Taranto eulogizes the philanthropist Jack Templeton who died a week ago:
An evangelical Christian who graduated from Harvard Medical School, he became a pediatric surgeon, and he believed passionately in scientific inquiry. Born to wealth as the son of financial legend Sir John Templeton, Jack Templeton understood the moral foundation upon which free markets depend.
In a note published almost 10 years ago on the Web page of the Yale Class of 1962, he questioned a “tolerance†that “demands incessantly that one abandons all judgment.†He went on to ask: “Should we tolerate a public educational system with its entrenched self interest in which virtually every inner-city parent knows is destroying any hope or possibility of their children achieving meaningful opportunity in a 21st Century Economy?â€
Too many scions of wealth squander it or betray the principles required to create it. Jack Templeton used his good fortune to spread those moral and economic principles for the benefit of all.
Far too many forget that a free market system can only endure within a moral context. That this moral context has been eroding should be obvious:
NEW YORK (AFP) –
Nearly half of finance industry workers suspect competitors of cheating, while over a third in the highest pay bracket have witnessed wrongdoing first hand, according to a survey seen Thursday.Key findings include that 23 percent believe their colleagues have engaged in unethical activity to gain an edge, nearly double the level in a 2012 survey, while almost one-fourth of those making more than $500,000 a year have felt pressure to compromise ethically.
The survey of 1,200 workers in the US and Britain said many believe crossing ethical barriers to be “part and parcel of succeeding in this highly competitive field.”
A republican system can only endure within a moral context, too, as Plato pointed out millennia ago. Remember that at the time of his death Thomas Jefferson’s library largely consisted of books on ethics.
“A republican system can only endure within a moral context, too, as Plato pointed out millennia ago.”
We’re living in the fevered city.
Exactly. And I can see you’ve read the source material.
As it happens this actually ties in to a subject being discussed in the comments thread of another post. There are extrinsic rewards to a job and intrinsic rewards. The extrinsic rewards may be money, status, fame, or praise. The intrinsic rewards are the rewards that come from the job itself.
The intrinsic rewards of pedagogy are similar to those of farming or medicine. It is the realizing of the fruits of your labors in the growth and fluorishing of your students and your relationship with them. The more highly predisposed you are to seek the extrinsic rewards over the intrinsic ones, the less likely you are to be happy with any job.
Worked with Jack some, with his wife a lot more. Wife worked with both a lot more. You know how you read the comments about someone you knew and they just don’t seem to fit? Applies here. Anyway, couldn’t agree more that the moral component is important.
Steve
If you haven’t had a chance, read Kara Stein’s dissent on SEC issued waivers for the five big banks. Morals aren’t only failing in markets, they’ve failed among regulators who devote themselves to enabling the criminal behavior they’re supposed to stop.
I dissent from the Commission’s Orders, issued on May 20, 2015, that granted the following waivers from an array of disqualifications required by federal securities regulations:[1]
1) UBS AG, Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. (“JPMCâ€), and the Royal Bank of Scotland Group Plc (“RBSGâ€), waivers from the provisions under Commission rules that automatically make them ineligible for well-known seasoned issuer (“WKSIâ€) status;[2]
2) UBS AG, Barclays, and JPMC waivers from automatic disqualification provisions related to the safe harbor for forward-looking statements under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934; and
3) UBS AG and three Barclays entities[3] waivers from the automatic Bad Actor disqualification provided under Rule 506.[4]
The disqualifications were triggered for generally the same behavior: a criminal conspiracy to manipulate exchange rates in the foreign currency exchange spot market (“FX Spot Marketâ€), a global market for buying and selling currencies. Traders at these firms “entered into and engaged in a combination and conspiracy to fix, stabilize, maintain, increase or decrease the price of, and rig bids and offers for,†the euro-dollar foreign currency exchange (“FXâ€).[5] To carry out their scheme, the conspirators communicated and coordinated trading almost daily in an exclusive online chat room that the traders referred to as “The Cartel†or “The Mafia.â€[6] Additionally, salespeople and traders lied to customers in order to collect undisclosed markups in certain transactions.[7] This criminal behavior went on for years, unchecked and undeterred.[8]
There are compelling reasons to reject these requests to waive the automatic disqualifications required by statute or rule. Chief among them, however, is the recidivism of these institutions. For example, in the face of the FX criminal action, a majority of the Commission has determined to grant Citigroup yet another WKSI waiver, its fourth since 2006. It is worth noting that Citigroup was automatically disqualified from WKSI status between 2010 and 2013 for unrelated misconduct, meaning that it has effectively now triggered WKSI disqualifications five times in roughly nine years. Further, through this latest round of Orders, the Commission has granted:
Barclays its third WKSI waiver since 2007;
UBS its seventh WKSI waiver since 2008;
JPMC its sixth WKSI waiver since 2008; and
RBSG its third WKSI waiver since 2013.
The Commission has thus granted at least 23 WKSI waivers to these five institutions in the past nine years. The number climbs higher if you include Bad Actor and other waivers.
This latest round of criminal charges also comes on the heels of the Department of Justice’s actions against UBS, Barclays, and RBSG for their collusive manipulation of the London Interbank Offered Rate (“LIBORâ€), a benchmark used in financial products and transactions around the world. The manipulation of LIBOR was flagrant and “impact[ed] financial products the world over, and erode[d] the integrity of the financial markets.â€[9] As part of the settlements in the LIBOR matters, UBS, Barclays, and RBSG each entered into agreements with the Department of Justice in which they undertook not to commit additional crimes during the term of the agreements.[10]
Allowing these institutions to continue business as usual, after multiple and serious regulatory and criminal violations, poses risks to investors and the American public that are being ignored. It is not sufficient to look at each waiver request in a vacuum.
And today the Commission heads further down this path. After the LIBOR guilty pleas, UBS was granted a WKSI waiver that was explicitly conditioned on compliance with the judgment in the LIBOR-related matter.[11] That explicit condition has now been violated. Yet, the Commission has just issued UBS a new WKSI waiver.
It is troubling enough to consistently grant waivers for criminal misconduct. It is an order of magnitude more troubling to refuse to enforce our own explicit requirements for such waivers. This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them.
In conclusion, I am troubled by repeated instances of noncompliance at these global financial institutions, which may be indicative of a continuing culture that does not adequately support legal and ethical behavior. Further, I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic. Firms and institutions increasingly rely on the Commission’s repeated issuance of waivers to remove the consequences of a criminal conviction, consequences that may actually positively contribute to a firm’s compliance and conduct going forward.
http://www.sec.gov/news/statement/stein-waivers-granted-dissenting-statement.html
Let us not forget that Timothy Geithner did such a wonderful job regulating Citigroup that President rewarded him by promoting him to Secretary of Treasury, and Geithner was so impressed with the Wall Street banker’s performance that he promptly began working to get them out of the TARP regulations regarding their bonuses.
The people regulating an industry often know little about the industry they are regulating, and they rely upon the expertise of the industry to understand it. There is nothing necessarily nefarious, but the industry has a viewpoint that is oriented towards the best interests of the industry. Many of the regulators begin to adopt this viewpoint because there is no opposing viewpoint.
More than likely, Geithner is not evil. More than likely, he is an idiot. To the financial industry, he was a useful idiot, and they made him their bitch. He got to hang out with the “swells”, and they treated him like he was one of them. He did not want his “friends” to get unreasonably screwed over, and he helped them any way he could.
Why anybody thinks it is a good idea to let Wall Street investors anywhere near the Fed spigot is beyond me, and how anybody can think Sen. Dodd and Rep. Frank could possibly outsmart Wall Street bankers is mind boggling. The only people in Washington who can outsmart Wall Street came from Wall Street. If the others could have made it on Wall Street, they would have.