The Ethical Barometer

How do you know when your country has reached the point of no return on corruption? Spain may have made it. The Popular Party made a pledge, drew a “red line,” as the leader of the Valencia Province phrased it, to refuse to allow any indicted official on the ballot. That’s telling them!

Valiant efforts aside, the pledge did not come to pass. The party could not find enough politicians who were not indicted. As a result, 50 indicted officials appeared on the Valencia ballot in Sunday’s election. Valencia is known as a corruption hot-spot, but a total of 467 mayors in Spain are under indictment, mostly for mishandling public money or kickbacks for awarding government contracts.

The party leaders said that although it did indeed end up with indicted candidates on the ballot, they had reviewed the candidates on a case-by-case basis. The screening standard used for being indicted but still allowed on the ballot was one of “shameful behavior.” That standard remains undefined, Continue reading →

“This is the part I don’t get.” So spoke Diane Chambers (Shelley Long) in the series “Cheers,” as she was trying to understand the charm and drawing power of Carla Tortelli’s (Rhea Perlman) ex-husband, Nick Tortelli. Despite his “pond scum” nickname, infidelity, poor hygiene, and a host of other rascallion behaviors, Carla had trouble resisting him. So also did his new wife, Loretta (Jean Kasem). Regardless of what he did, they both kept going back to him.

There are many Nick Tortellis on Wall Street. Enter Jon Corzine and his new plans for a hedge fund. Mr. Corzine headed up MF Global Holdings, a firm that he bankrupted by positioning investments in PIGS (Portugal, Italy, Greece, and Spain). He was convinced these countries would recover and he doubled down on their Continue reading →

In the lessons learned department, Wells Fargo, a bank that largely escaped the fall-out from the subprime mortgage market because it chose not to go down that path too far, is the first lender to recognize the evolving risk in the subprime auto lending market. No more than 10% of its portfolio will be made up of subprime auto loans.

Market analysts praise the bank for “deftly managing risk.” How about if we praise the bank for seeing a pattern in history and acting accordingly? The outcome on the subprime auto market cannot be good. The analysts also wonder whether other banks will follow Wells’ lead. Fools rush into risky markets and the greater fools stay in them. The biggest fools grow their interests in those markets.

By way of full disclosure, Wells Fargo is the Barometer’s bank, precisely because it has shown wisdom and a focus on the long term. No company is perfect, but this one deserves credit for a choice to not ride the market wave until the crash.

In the class, “Sports, Ethics, and Religion,” 64 of the 272 students taking the class were suspended for cheating. How difficult is the concept of not cheating in an ethics class?

Dominique Strauss-Kahn, former head of the IMF, and one-time candidate for president of France, at his trial in Lille, France for aggravated pimping for his alleged role in organizing orgies in that city. He later admitted under oath that he attend 17 of these decompression valves. Quarterly “sessions of leisure” for two years do add up to 17. Continue reading →