Sozialalmanach - Caritas Luxembourg

free-enterprise and private property system. The role of the corporate executive is that
of an employee of the owners of the business and to conduct the business in accordance
with their desires. Their desires will be generally to make as much money as possible while
conforming to the basic rules of society, as embodied in law and ethical custom. In this
line of thought, the pursuit of goals pertaining to social responsibility is contrary to the
role of the corporate executive unless he or she is the owner of the business in question.
Capitalism in its unfettered form is thus reduced to the sole pursuit of profit. The
measure of personal success within such a culture is measured in personal financial gain
and the accumulation of personal wealth. In essence, that is the “American Dream” in
which individual interests take precedence and duty is strictly limited to compliance with
the law and its related regulation. Otherwise, every thing goes!
Under the Clinton and especially the Bush administrations, financial rules and regulations
were either discontinued or poorly or not enforced. Banks and other financial services
providers were given increasingly free rein to do what they pleased and how they pleased
to do it. Rating agencies, free to act as they pleased too and in their own pursuit of profit
and financial gain, willingly cooperated with banks and other financials services providers
in providing low-risk ratings of financial instruments that increasingly misled investors to
believe that high financial returns could be sustained without apparent risk.
Now, add to that the “Madoff affair”. The financial sector is not immune to fraudulent
activities. But the extent and duration of the Ponzi scheme made by Madoff is unheard of
and is no less the epitome of the failure of the American regulatory and oversight authorities.
It personifies incompetence and lack of will to enforce oversight within the financial
sector. The oversight authority concerned, the Securities and Exchange Commission (the
SEC), ignored warnings received from financial professionals for a decade and undertook
“token” examinations of Madoff’s business operations that could only lead to giving
Madoff a clean bill of health.
While a certain number of banks and other financial services providers questioned and
refused to place Madoff products with their investors, others held no such reservations.
They were in particular attracted by the generous “retrocessions” (kickbacks of money
made by Madoff to those fund distributors willing to place his product offerings).To the
toxic assets of structured financial products held by banks and investors alike, came to be
added valueless assets.
In the mind frame of bankers and other financial services providers, Madoff excepting,
nothing illegal has occurred. In fact, no banker or other financial executive has been accused
of malfeasance in these activities and is being pursued in justice for criminal actions. At best,
a bank or other, and even one or the other regulator or oversight body, is being investigated
or some times pursued in justice by investors in the hope of recovering funds lost.
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