It's All About Trust

The recent events of the weekend and today remind me again that doing good business is all about trust. How can the head guy at Bear Stearns continuously tell the world that his institution has no liquidity problems then all of a sudden sell out for pennies on the dollar?

Crap like that makes all of us in American business look really really bad. A lot of trust has been lost and a lot of money has been lost. People have effectively lost their pensions, have lost (or will lose) their jobs, and a lot of people will be out on the street.

There is really only one way to gain back trust in this industry. And that is to police ourselves and hold ourselves to the utmost of ethics and standards. If you are sitting on the board of a company (such as Bear Stearns), you better step up to the plate and do your job and make sure that you are abiding by your fiduciary duty to your shareholders. If you know that there is some funny business going on, you are putting yourself on the line by allowing it to happen and not doing anything about it.

Now I really do not give a hoot if your company is doing poorly and your stock is getting crushed in a justifiable manner. I happen to agree that market forces are fair and just, even if that means some people lose. However, a company cannot undermine the whole system on which it exists - it can't simply lie to people and create false statements.

The Chairman of Bear Stearns is going to feel the pain soon. Whether it be lawsuits, time in prison, or absolute ridicule.

That's not going to change the fact trust in our financial system has eroded. Will Citigroup, Lehman, Morgan Stanley, or Goldman be worth pennies on the dollar tomorrow?

I am still waiting for an honest CEO to come forward in a time of crisis such as this and basically say that he swears on his life and that of his family that he is telling the truth - that he can be trusted and that his company is in good shape.

Comments

[Ellie Crowe]

Great amount of useful information from Guy Kawasaki's AllTop.com and his blog pages are always great to read -- fun and informative. Thanks!!