Reuters blog archive
By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Another day, another conflict of interest situation for Goldman Sachs. New internal rules at the securities firm impose fresh limits on bankers investing in specific stocks, bonds and hedge funds. Goldman knows too well how easy it is to cross a line when treading at its edge. The new policy raises a bigger question, though: Why are Wall Street dealmakers allowed to own individual securities at all?
No financial institution gets more attention for its handling of delicate, potentially hazardous relationship conundrums than Goldman. Its British advisers, for example, received a notorious “spank from Hank” – Lloyd Blankfein’s predecessor at the helm, Hank Paulson – back in 2006 when they followed a pitch to defend BAA with the possibility of Goldman buying a big stake in the operator of London’s Heathrow airport.
More recently, it was a U.S. court that took umbrage at Goldman’s unbecoming presence on both sides of a deal. Delaware Judge Leo Strine in 2012 called it “furtive” and “troubling” that Goldman owned a multibillion-dollar stake – and one of its senior energy bankers a smaller one – in Kinder Morgan while advising the pipeline operator’s takeover target El Paso. The bank surrendered its fee on the transaction after El Paso shareholders sued.
from The Great Debate UK:
--Charles Blanchard is a partner at Arnold & Porter LLP, and a panelist at the Chatham House conference on autonomous weapons. He was formerly general counsel of the US Air Force. The opinions expressed are his own.--
It sounds like something right out of a blockbuster science fiction movie: killer robots that make decisions on who to kill without any human involvement. Not surprisingly, several human rights groups have argued that now is the time for a ban on the development and deployment of these weapons. While there are very real ethical and legal concerns with these potential weapon systems, such a ban is both unnecessary and likely counterproductive.
from Felix Salmon:
Ostensibly Respectable Academic Is In Fact A Hack: it's a hardy perennial, and an enjoyable one at that. The best example is Inside Job, where big names like Ric Mishkin and Glenn Hubbard got their well-deserved comeuppance. And it's a genre I've indulged in myself: last year, for instance, I spent 4,500 words on a paper by Bob Litan, showing how he lies with numbers to arrive at his paymasters' predetermined conclusion.
But here's the thing: for this kind of article to carry any weight, it has to demonstrate the mendacity or venality of the academics in question -- and, ideally, those academics should have a high-profile reputation which deserves to be tarnished.
from Photographers' Blog:
By John Kolesidis
Today I woke up to the deafening sound of thunder. The rain was pouring hard.
I made myself a cup of coffee and watched the rain out the window flood the surrounding streets. I was at a loss as to how I would get to the office without getting soaked, so I decided to stay put until things calmed down a bit. When I finished my coffee, I looked out the window again, and things had taken a dramatic turn.
A bit further down the street I could see an immobilized car getting swollen by the flood. Then I heard some muffled voices. I put on my galoshes and raincoat, took my cameras, and tried to get there. I walked through a small park, but that led me behind barbed wire which I couldn't get over. I saw a woman trying to hold on to her car door, while the water was at waist level. I called out to her not to be scared, urging her to hold on to the door until I could get closer.
from Jack Shafer:
This article originally appeared in the September/October issue of the Columbia Journalism Review.
In 2007, investigative journalist Ken Silverstein went undercover to test Washington lobbyists’ taste for sleaze. Using an alias, Silverstein created a fictitious energy firm that ostensibly did business in Turkmenistan and approached professional lobbyists to see if they could help cleanse the regime’s neo-Stalinist reputation. The bill for services rendered—newspaper op-eds bylined by established think-tankers and academics, visits to Turkmenistan by congressional delegations, and other exercises in public relations—would have been about $1.5 million. (Disclosure: I consider Silverstein a friend.)
from Unstructured Finance:
Greg Smith, the ex-Goldman Sachs salesman who stunned the investment bank with a scathing public resignation in March, is now on the defense.
Smith, whose book, “Why I Left Goldman Sachs” hits bookstores today, has been facing the wrath of Goldman, media critics, and online commenters since last week, when bits and pieces of his book began to leak out and Goldman quickly jumped at the chance to characterize him as an undistinguished ex-employee with an ax to grind.
from Lucy P. Marcus:
Following the proceedings of the News Corp annual general meeting, one can’t help but think of the proverbial definition of insanity: doing the same thing over and over again and expecting a different result.
I’m not talking about Rupert Murdoch. He’s been doing the same thing for years and always getting the result he wanted. He comes away from yet another AGM with the dual roles of CEO and chairman firmly in hand. Also, the dual voting stock structure remains so that, though Rupert Murdoch and his family own approximately 12 percent of the shares, they hold 40 percent of the voting power. In essence, Rupert Murdoch and his family control the decisions and destiny of the company relatively unchallenged. Both Rupert Murdoch and News Corp board member Viet Dinh made abundantly clear during the board meeting that this was not going to change. Though the company has gone through the motions of appointing new independent directors, the choices suggest a not-so-subtle sense of humor: One of the new independent directors is the former president of Colombia, Alvaro Uribe, who was embroiled in a wiretapping scandal of his own.
from The Great Debate:
During the 15 years that I led the Air Force’s contractor responsibility and fraud missions, we debarred and suspended nearly 5,000 contractors – more than any other government agency. But what is far more important than the statistics is the greater protection we were able to provide the government by exercising these powers fairly and with balance, through the careful exercise of discretion. But that is coming to an end. We are now seeing a disturbing trend: new rules and outside pressures that would limit, and even eliminate, the ability of officials like me to exercise that discretion. Companies are being “blacklisted” – often for lengthy periods, sometimes automatically without due process, and often based solely upon the actions of a few rogue employees, with little consideration of whether such action is needed or fair.
The debarment regime is important for the government, and frankly makes sense. Most of us would not hire a plumber whom we knew did faulty work on a neighbor’s pipes. Given that, why would we put up with the serious fraud being committed today, particularly where it may affect our troops in multiple war zones? We can and should work only with responsible contractors. To do that, the government sets standards for contractor eligibility, and each agency has a suspension and debarment (S&D) official empowered to administer those standards. But in administering those standards those officials must always be mindful that the S&D system is not intended as a tool for punishment. While punishing fraud is important, it properly belongs in the criminal justice system, not with procuring agencies.
from Felix Salmon:
Randy Cohen, the NYT's former Ethicist columnist, has now attempted an ethical defense of running red lights on his bicycle. "I flout the law when I’m on my bike," he writes; "you do it when you are on foot, at least if you are like most New Yorkers."
This, of course, is one of the weakest ethical defenses imaginable: if lots of other people are flouting the law, that doesn't give anybody else the ethical right to do so, let alone the legal right. But Cohen continues:
from Felix Salmon:
Business school professor Luigi Zingales, with the full agreement of fellow business-school professor Justin Wolfers, has an important op-ed under a provocative headline: "Do Business Schools Incubate Criminals?"
Zingales's point is a good one: that the way business-school students study ethics is much like the way that entomologists study ants. Quite aside from the fact that ethics courses are generally taught by relatively junior professors, they also tend to shy away from actually telling students to be ethical: