Blame Game Does Nothing to Fix Financial Crisis

Lora Bentley

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 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.

Add Comment      Leave a comment on this blog post
Oct 23, 2008 1:27 AM SteveH SteveH  says:
Right, the blame game does not fix the problem, but in fact it does help define what the problems are. SO if you don't have clarity of the problems, how will you know what solutions are needed? Reply
Oct 23, 2008 6:31 AM vftester vftester  says:
Try telling that to the thousands, if not soon hundreds of thousands who are made unemployed by the actions of the few boards or directors.A case in point, in Sydney recently, Optus sacked 115 operational networks staff. However, no one questioned the real reasons. Optus official statement was that it was seeking operational efficiency. The truth however is more like "Division Directors blew $3million, Sack Staff Instead". According on internal memo, Optus business divisions deliberate under provisioned because it make the performance of business unit executives look good and passed on the resultant risk to operations. Operations directors, being "Yes" men to the business did not push back which resulted in operations having to wear the $3million blow out that really started with the business. When this came to light, the directors got together, even to the extent of retaining a GM, Darren Mills, who had already resigned to join Telstra Australia - and on the guise of having been walked by Optus - to orchestrate the sackings of innocent operations staff.Get it right, unless we pin the cause of the problem, the problems will not go away. We will revisit this over and over as long as we remain subservient to corporate mismanagement. Reply

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