As the financial services train-wreck continues, CEOs are getting better at saying they feel shareholders’ pain. But actions speak louder than words, and it’s time some of these folks acknowledged where the buck really stops–in actions, not words.
CEOs are happy to accept responsibility–and fortunes in annual compensation–when times are good. Thus far, however, unless forcefully shown the doors, they seem to show no willingness to accept real responsibility when things go bad.
If CEOs get rewarded when companies like Washington Mutual, Citigroup (C), Wachovia, UBS, Merrill Lynch (MER), Morgan Stanley, GE (GE), Bear Stearns (BSC), et al, gamble and win–and, boy, do they get rewarded–then they should get punished when the same gambles lose. And don’t think for a second that “unprecedented market disruption” these folks blame for recent losses is actually the cause of the tens of billions they have vaporized. The cause is and was risky bets that went bad.
Instead of saying he was “deeply disappointed” with Wachovia’s disastrous first quarter, in other words, Wachovia CEO Ken Thompson should have said he was deeply disappointed, accepted full responsibility, and tendered his resignation. Why? Not because Ken actually made the bets that blew Wachovia’s capital to smithereens, forcing it to raise $7 billion in emergency capital. Because Ken is responsible for those bets, and because accepting that responsibility with actions, not words, is the right thing to do.
The world won’t change if today’s bank CEOs resign–the new senior executives will still take credit in good times and blame “market forces” in the bad time. But at least some high-profile people will lead by example and do what too many Americans don’t: accept full responsibility for their decisions.
Yes, we know you’re disappointed. Now quit.
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