We’ve grown used to hearing companies tell us that something unexpected happened, an incident outside their control, something they're not responsible for.
By Per Grankvist
Recently many readers of Børsen, the largest business daily in Denmark, were surprised to find that the chairman of Lokale Pengeinstituer, an alliance of 75 independent banks, had assumed full responsibility for the financial crisis. In a candid interview, Claus Petersen said that in his opinion financial institutions as a sector have the main responsibility for things going wrong in the world economy.
“Even if politicians too can be blamed, we have the biggest responsibility because we’ve been far to optimistic.”
Admitting Failure: Part of a Company's Corporate Social Responsibility?
Hearing the CEO of a bank, or any large corporation for that matter, apologize for any wrongdoings, big or small, is rare these days, despite heightened media attention and the Occupy Wall Street protestors. We’ve grown used to hearing companies tell us that something unexpected happened, an incident outside their control, an unpredictable event.
As a consequence they assure us they will take adequate measures, routines will be changed, new policies put in place as soon as possible, someone down the long convoluted hierarchy of decision makers will be blamed, but that essentially the companies themselves are blemish-free, incapable of any wrongdoing.
Since it is our combined faults, inadequacies and limitations that make us human, I’m always surprised at times when “the human factor” is attributed to be the root of the problem. These simplistic conclusions reveal an impersonal view of companies, as if they were perfectly rational profit factories that if operated independently of employees or the world around them, would work flawlessly.
When No One is to Blame…
Of course, by blaming “a human factor” rather then “a human we employ,” we are also successfully distancing ourselves from the problem.
Yet, there isn’t one single financial institution that can be blamed for having any part in the financial crises of recent years. Only their employees.
Stock exchanges don’t create new financial instruments by themselves, their managers do. Investment banks don’t act on insider information, their analysts do. Banks never repackage bad mortgages as good ones in order to sell them, their sales people do.
…Who Do You Trust?
Is it wrong to expect these financial institutions to acknowledge their role in getting us into this mess before we can learn to trust them again?
According to Petersen, its important that the financial sector admit their participation in creating the market atmosphere that preceded the crash. "In any case, we’ve helped fund an atmosphere where one, if one had had a cooler mind, would be able to see that things were too good to be true. And we have to stand up and admit that," he concluded, referring to the billions of dollars made available as cheap mortgages on the real estate markets in the years leading up to the financial market meltdown.
The general reluctance to be as human as Petersen and to admit previous failures has caused the general trust for the financial sector to reach new lows, something anyone working at a bank can testify.
“A few years ago, when I talked to people, they generally believed in what I said. But I have had to get used to that people now generally no longer believe what I say” said Petersen.
But Petersen is an unlikely rarity. We cannot give into his humility and expect the executives at JPMorgan Chase, Royal Bank of Scotland or UBS to follow his example anytime soon. Having used money from the state rescue funds to fly first class, stay at five star suites, and pay six figure bonuses needed to keep kids at Ivy League universities, any hint toward admitting any part in the crises would cause unthinkable demands for repayment.
After all, greed is a trait as human as being respected.
For smaller financial institutions or bank alliances such as Lokale Pengeinstituer, confessing to being participatory in causing the financial trouble might be a small price to pay to earn back the trust of the general public and eventually attract new customers.
It's simple really: We're all human. And we can learn to forgive those who confess. Even inhuman corporations.