Stephen H Baum Leadership

“Almost no one expected what was coming. It’s not fair to blame us for not predicting the unthinkable.” – Daniel H. Mudd. former CEO of Fannie Mae.

How about blaming you for irresponsibility of failing your key job requirements like protecting the viability of the enterprise against a wipe-out, ensuring risk-taking is not bet-the-ranch and doing the essential contingency planning? What were your assumptions? That the price of homes could never go down? That derivatives are all sound investments and you understand how they work? That Alt-A mortgages to people who have bad or no credit histories cannot get you in trouble? Was there no limit to how and how much you would put the capital at risk?

It is one thing for a less educated public to get frenzied with greed, but should there not be a higher standard for leaders of financial institutions than encouraging “tulipmania” that lines your pockets? What does fiduciary responsibility look like for people who should remember the savings and loan crisis bailout, the Long Term Capital crisis and the many other periods in which unrestrained greed led to catastrophe for homeowners and small investors?