Faulty Ethical Reasoning, By Some of the Best Minds

Posted on May 20, 2015 by mmjdiary

When the new stories, statements, and press releases that result from ethical lapses are published, there are certain quotes and phrases that jump off the page. The mind reads, revisits, and rereads the quotes and phrases and concludes that an ethical lapse should not be made worse by those involved. Too often, their explanations and faux apologies only serve to confirm that they have an ethical tin ear and that is what got them into trouble in the first place. Some examples serve to illustrate as well as offer guidance on what not to say and do when you are in the headlines.

The ABC News Anchor George Stephanopoulos offers a classic example of what not to do and say after an ethical lapse. Mr. Stephanopoulos has a $108 million contracts with ABC News as the host of a morning television show as well as its primary political anchor. In an interview of the author of the new book, “Clinton Cash,” by Peter Schweizer, Mr. Stephanopoulos doled out a grilling. Mr. Stephanopoulos concluded the interview by explaining that Peter Schiewzer’s book regarding donations to the Clinton Foundation (Bill, Hillary, and Chelsea) did not establish any criminal conduct and that Mr. Schweizer had been a speechwriter for George W. Bush.

What Mr. Stephanopoulos did not disclose was that he had been a Clinton Foundation donor ($75,000) and that he had moderated discussions and served on panels at Foundation events. When the information about Mr. Stephanopoulos’s involvement became public, he issued the following statement: Continue reading →

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Jon “Nick Tortelli” Corzine

Posted on April 22, 2015 by mmjdiary

“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 →

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The Tricky Business of Corporate Social Responsibility

Posted on April 22, 2015 by mmjdiary

Wal-Mart received the accolades that have long kept their distance from the company when it announced that it would be increasing its employees’ wages. Bully! The advocates of the $15 minimum wage were thrilled. If Wal-Mart can do it, anyone can!

What the advocates, customers, and employees missed was the power of economic equilibrium that must be satisfied. Wal-Mart simply cannot maintain its low-cost model with a new wage structure. Those who follow business closely saw it coming and “it” took effect about one week after the wage largesse. Wal-Mart is squeezing its suppliers. Those who want to sell their wares at Wal-Mart must cut Continue reading →

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The Atlanta Public School System Convictions and Sentences

Posted on April 22, 2015 by mmjdiary

The case against the Atlanta Public School System began with cheating and ended with prison sentences. There were 35 educators and administrators indicted. Two of them died before they could be tried, including Beverly Hall, the former superintendent of the APS, who died following a battle with breast cancer. Twelve went to trial, and 11 were convicted. The remaining individuals had plea agreements.

The racketeering charges related to the cheating scandal (one of the largest in U.S.history, and that is saying something given that there have been scandals in 39 states and D.C.) that permeated the school district for almost a decade. The governor’s task force report on the cheating scandal named 178 principals and teachers who were involved in everything from giving out answers to “test clean-up parties” where they put on gloves and changed students’ answer sheets. Of that 178, many retired, some resigned, and some were fired. Continue reading →

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“Money shufflers don’t come cheap.”

Posted on April 22, 2015 by mmjdiary

Warren Buffett in his annual shareholder letter. Mr. Buffett was referring to investment bankers.

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Wells Fargo Puts a Self-Imposed Limit on Subprime Auto Loans

Posted on March 3, 2015 by mmjdiary

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.

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“After 2008, nobody was prosecuted.”

Posted on March 3, 2015 by mmjdiary

L. Dennis Kozlowski, former Tyco CEO, recently free of prison, work-release programs, and probation, bemoaning his unfair prosecution. Yes, convictions for unauthorized loans from the company, conspiracy, sales tax evasion, and falsifying corporate records were all just part of a prosecutorial conspiracy to persecute and prosecute a man who spent $6,000 of Tyco funds on a shower curtain for his Manhattan apartment.

The Barometer agrees — his conviction was silly because a man so bright and given so much should not have squandered it all by being cheap. If he had not tried to evade the 8.25% sales tax on his art collection activities, the rest of his Tyco activities would have gone undetected. And those activities, from the $2 million birthday party for his second wife (at company expense) to a key employee loan program that did not require repayment of the loans, were the stuff of criminal charges. All cheap and silly decisions by a man who still cannot seem to admit that what he did was just plain wrong.

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In the irony department . . .

Posted on February 23, 2015 by mmjdiary

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?

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The Higher the Level of Education, The Greater the Puffing on Social Media

Posted on February 23, 2015 by mmjdiary

A Jobvite survey finds that some of those who are searching for a job admit inflating their job skills. And the higher the level of education, the more inflaters you find:

Post-graduate 20%
College degree 18%
High school or less 9%

Are we learning puffery in college? Is there less to inflate? Or is it rationalization by sophisticates?

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“This kind of gamesmanship goes on all the time. It’s certainly accepted as part of the culture that you game the system as much as you possibly can, and if you don’t get caught, it ain’t cheating.”

Posted on February 16, 2015 by mmjdiary

Professor Stephen Mosher, Ithaca College, an expert in sports ethics, reflecting on the Patriots’ Deflategate and other similar sports examples of shaving the treetops to win.

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“When reading court documents, we have the image of frenetic activity, that we would do only that. But it was only four meetings a year over a three-year period. I have an extremely hectic life and these parties were sessions of leisure, like decompression valves.”

Posted on February 16, 2015 by mmjdiary

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 →

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“I never considered myself an organizer of the parties.”

Posted on February 16, 2015 by mmjdiary

Dominique Strauss-Kahn, former head of the IMF, testifying at his trial in Lille, France. Mr. Strauss-Kahn is accused of aggravated pimping for his alleged role in organizing sex parties in Lille, France. He added that he enjoyed “festive and playful moments there,” and his lawyers insist that although he attended the orgies he was unaware that prostitutes were present. Only in France.

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“I don’t believe so.”

Posted on January 23, 2015 by mmjdiary

Tom Brady, quarterback for the New England Patriots, in response to a question at his January 22, 2015 press conference on the deflated footballs controversy. The question was, “Did you cheat?”

The Barometer has learned, lo these many years of study, to watch the parsing. The belief that one did not cheat is not the same thing as, “I didn’t cheat.” Witness Lance Armstrong’s explanation of his denial (to Oprah) lo the many years Continue reading →

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“Why should we have to go to class if we came here to play FOOTBALL, we ain’t come to play SCHOOL, classes are POINTLESS”

Posted on January 1, 2015 by mmjdiary

Cardale Jones. Ohio State quarterback, in 2012, on his Twitter account, following a sociology exam. Sadly, he is right about the college football culture, but wrong about the classes. For one thing, a good writing class could offer instruction on punctuation, “ain’t”, and the dangers of overuse of capitalization in one’s messages. Also, classes in finance could offer some money management tips and quite a few classes could offer insights into contracting and union rights — some mighty POWERFUL information for his forthcoming NFL days. Just a few thoughts as the bowl games begin.

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