Financial Myopia

Today, the United States finds itself disillusioned by an idealistic image of prosperity. Having molded a society based on single-minded profiteering, only to be let down by an economic collapse so severe, that the fundamental business models of large standalone financial institutions is being questioned. These institutions, which have represented a great and prosperous nation, find themselves grappling to keep their noses above water. Highly leveraged, and surviving on capital created from inflated valuations, their leaders have failed to realize that even in the age of Globalization, business must support the nation in which they were founded and in which they flourished. To humanize this notion, this principle is synonymous with “Work for your family and support your roots, not in spite of them”.

A significant shortcoming revealed by leaders of these institutions is that they have failed to collaborate with the nation’s regulatory bodies; viewing the legal structure in business as a hindrance to profitability and growth. A sound regulatory structure is viewed as a business benefit only inasmuch as it enables transactions and controlled liquidity in the capital markets for large enterprises to operate. As momentum grows, increased regulation is required to prevent corruption and deceit, accounting scandals or otherwise. When regulatory bodies evolve to match the scale and complexity of financial transactions, a tension between the profiteering interests of business and the integrity-ensuring interests of regulatory bodies collide. This is where the leaders of financial institutions have failed the country, and ultimately their own institutions. With a rash disdain for laws such as SOX, GAAP frameworks, and the like, they have failed to see the importance of such regulation for the long-term (read indefinite) sustainability of their enterprises. Further, they have failed to see the immense impact their enterprises can have on the country’s economy at large. These leaders have been plagued with a single-minded focus on generating capital, which has led to vague and unstructured business models based on unreasonable levels of speculation. While much of this has taken place due to competitiveness in the markets, many such models have been created largely to circumnavigate the country’s legal framework through sheer complexity.

Partnering with politicians without the objective of helping advance favorable, “business friendly” interests is considered poor business logic. Corporate backing of political parties through monetary gifts and public support lacks even the faintest hint of patriotism, implying only a single-minded, profit-seeking bias. While decisions to support political parties might promote the short-term success of a single large enterprise, they are not sustainable once companies achieve the size and momentum that many of the premier American financial institutions have attained. The enormous impact such enterprises can have on the nation’s economy requires their leaders to support political parties with patriotism (not profiteering) as their underpinnings. More importantly, they must do this in spite of any short-term consequences that any proposed regulation by that political party may have on their next quarter's income statement. The prevailing perspective that patriotism takes a back seat to business lacks the perspective required for an indefinitely sustainable enterprise. This principle holds true despite the effects of globalization, and becomes increasingly important as the economic impact of institutions on the nation at large increase.