04.01.2015 Views

Climbing Above the Culture Clash

Climbing Above the Culture Clash

Climbing Above the Culture Clash

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

America’s Future Trust-Brokers:<br />

BU Law Looks at <strong>the</strong> Economy<br />

Professor Tamar Frankel on <strong>the</strong> Financial Crisis<br />

and <strong>the</strong> New Course It Has Inspired<br />

Trust.<br />

It’s a concept that’s on shaky ground<br />

in <strong>the</strong> financial world <strong>the</strong>se days. But<br />

according to BU Law Professor Tamar<br />

Frankel, it remains <strong>the</strong> cornerstone<br />

of our entire economic system.<br />

Frankel has devoted much of her storied<br />

legal career to <strong>the</strong> concept of trust,<br />

teaching and writing extensively on<br />

corporations, mutual fund regulation<br />

and fiduciary law, serving at <strong>the</strong><br />

Securities and Exchange Commission<br />

(SEC) and visiting at <strong>the</strong> Brookings<br />

Institution. Earlier this year, she testified<br />

before Congress about Bernard Madoff’s<br />

$65 billion Ponzi scheme, and offered<br />

recommendations on how to reform<br />

our beleaguered regulatory system.<br />

Reform is essential, Frankel told<br />

Congress, because no investment<br />

system can flourish in <strong>the</strong> absence<br />

of trust between investors and<br />

financial institutions. She expanded<br />

on <strong>the</strong>se thoughts in a recent<br />

interview with The Record.<br />

“Over <strong>the</strong> last 30 years, <strong>the</strong>re has been<br />

a shift away from a reliance on law<br />

and morality toward self-protection<br />

as a way to regulate <strong>the</strong> system,” she<br />

said. “The assumption is that people<br />

should protect <strong>the</strong>mselves in financial<br />

matters by educating <strong>the</strong>mselves.”<br />

But this simply won’t work, argued<br />

Frankel, noting that <strong>the</strong> investors who<br />

lost <strong>the</strong>ir shirts in <strong>the</strong> Madoff scandal<br />

included many of <strong>the</strong> most sophisticated<br />

individuals and institutions.<br />

“We live in a specialized society, so some<br />

services cannot be adequately supervised<br />

by <strong>the</strong> recipient,” she said. “I cannot<br />

supervise <strong>the</strong> work of my surgeon when<br />

he performs heart surgery, nor can a<br />

person supervise <strong>the</strong> work of his lawyer,<br />

or <strong>the</strong> services of <strong>the</strong>ir financial advisers.<br />

In order for <strong>the</strong> system to work, we have<br />

to entrust our money to our financial<br />

advisers, just as we have to give our<br />

surgeon authority over our body.”<br />

Fall 2009 | The Record | 9

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!