In Monday's Wall Street Journal, Harvard Business School management professor Bill George asked a question I haven't heard -- or seen -- anyone else ask yet in this economic crisis: Where were the boards? (Google News hosted the entire article free for a few hours. Now it seems only the first paragraph is visible unless you have a subscription. Go figure.)
His point was a good one: Were the boards of Lehman Bros, Fannie Mae, Freddie Mac and the other companies at the center of this crisis asleep on the job? Were they "lulled into complacency" by their CEOs, or did they use computer models rather than employing the astute business judgment for which they were likely appointed to their posts? George noted the primary responsibility of a board of directors is to ensure the company is viable and capable of weathering the inevitable storms the market will have from time to time.
That is especially true for a financial organization, and even more so in a post-Sarbanes-Oxley environment, where board members are reportedly better informed and not afraid to ask the hard questions. Simply put then, the boards of these companies failed.
Yes, they did. But it's important to remember that the ineffective boards were but one of many factors that contributed to the mess we find ourselves in. A blogger at Stockhouse.com makes a similar point about the "mark to market" rules in Sarbanes-Oxley. It may have contributed, but it certainly wasn't the only cause.
And at this point, it doesn't help to play the blame game. It doesn't change a thing.