The Conflict of Interest That Isn’t, But Looks Terrible Anyway

David Becker, the top lawyer at the Securities and Exchange Commission, is suddenly an embarrassment to his employers. He and his two brothers inherited more than $1.5 million in phony profits from their mother’s investment in $65 billion Bernard Madoff’s Ponzi scheme. Since the S.E.C. was famously asleep at its post regarding Madoff, its negligence and incompetence allowing him to destroy individual lives, charities and more, having a key lawyer at the regulatory agency profit from Madoff’s scheme, even by inheritance, looks corrupt and unconscionable.  Continue reading

Ethics Quiz: What Do the Gulf Oil Spill, Pearl Harbor, Bernie Madoff, 9-11,Tyler Colvin’s Chest Wound Have in Common?

Answer: They all are the inevitable consequences of the human conduct known (on “Ethics Alarms,” at least) as the “Barn Door Fallacy”—the irresponsible and unethical tendency to allow a dangerous situation to persist until it actually causes catastrophic damage, thus giving the decision-makers sufficient support to spend the money or cause the systemic disruption necessary to address the problem, too late, of course, to save the victims of the catastrophe. They lock the barn door, but after the horse is gone, and perhaps has trampled someone to death while leaving.

Who is Tyler Colvin? He is a major league baseball player in the employ of the Chicago Cubs. His season, and almost his life, ended yesterday: Continue reading

Summer Rerun: “Ending the Bi-Partisan Effort to Destroy Trust in America”

[TV is full of reruns these days, and sometimes I am grateful for them, for it gives me a chance to see episodes of favorite shows I had missed for some reason or another. Back in early March, I posted the following essay about the origins of America’s current crisis of trust in our government, and how it might be cured by our elected leaders. Since then, the crisis has deepened, and as I was doing some routine site maintenance, I reread the post. It is still very timely (unfortunately), and since far fewer people were visiting Ethics Alarms in March, I decided to re-post it today, with just a few minor edits. I promise not to make this a habit. Still, trust is the reason why ethics is so important in America: if there is a single post of the more than 700 I have written here since October 2009  that I would like people to read, this is it.] Continue reading

Sunday Ethics Round-Up: Cynical Fines, Drunk Norwegians, Lazy Newsmen and Pitiful Ballplayers

Here are some ethics issues to ponder from the recent news and around the Web:

  • Who says it pays to be ethical? The astounding insistence, under oath, by Goldman Sachs executives that they had done nothing wrong in selling admittedly “crummy” investment products to clients while using the company’s own money to bet that the same products would fail will not be sufficiently punished or contradicted by the S.E.C.’s cynical cash settlement of its suit against the firm. For a $500 million penalty, Goldman Sachs is off the hook for the equivalent of four days’ income, as the Obama Administration claims to the unsophisticated public (“Isn’t $500 million a lot of money?”) that it is “getting tough” with Wall Street. The fact is that Goldman Sachs’ unethical maneuvers paid off handsomely, and nothing has happened that will discourage it from finding loopholes in another set of regulations and making another killing while deceiving investors legally and, by the Bizarro World ethics of the investment world, “ethically.” You can read a perceptive analysis here. Continue reading

Thought Police at the Transportation Security Administration

Leave it to the Government to give us a definitive example of this problem: how do we tell if someone is being unethical or just infuriatingly dumb? Most of the time, of course, we can’t tell.  You can conclude, however, that when high-placed leadership in a government agency, without a legitimate reason for doing so,  takes action that makes those who worry about excessive government intrusion into private thought, speech and conduct quake in their boots, the end result is the same. Such actions cause an erosion of trust, the lifeblood of democratic societies. That makes the conduct dumb and unethical. Continue reading

Goldman Sachs Ethics: An Easy Call

Sometimes the biggest ethics stories are the easiest. I haven’t written much about Enron, for example. When a company uses deceptive, shell corporations to hide its liabilities so profit reports look artificially rosy and investors keep buying company stock, it is obviously unethical. Even the ethics-challenged management of Enron could figure that out. The Goldman Sachs scandal, once one clears away the static and spin, is almost as straight-forward.

Are the Democrats seizing upon Goldman Sachs as a scapegoat for the financial meltdown they, like the Republicans, were complicit in as well? Obviously. That doesn’t mean that the firm doesn’t deserve all the abuse that is being heaped on it. Did the S.E.C., supposedly an apolitical and independent agency, time the announcement of its suit against Goldman Sachs to help rally public opinion behind the Obama Administration’s proposed Wall Street reforms? It wouldn’t surprise me. We have seen previous Justice Departments, the C.I.A., the F.B.I. and other supposedly “non-political” entities act blatantly partisan over and over again. The S.E.C. trying to give Obama’s reforms a boost would be one of the least dastardly of these breaches, especially since the public should be informed about the kind of conduct the culture of Wall Street permits. G.O.P. complaints about the timing of the announcement are, to say the least, strange. Would it be better to hide this story from the public? What matters is whether the S.E.C. has a legitimate case. It is clear that it has. It may not turn out to be a winning case, but it is legitimate. [Note: Personally, I think it is  more likely that the S.E.C. announced the law suit to counter the embarrassing revelation that so many of its regulators spent endless hours on the job surfing and downloading pornography off the internet.]

The legal issues will probably be settled in court; the topic now is ethics. After watching the testimony of various Goldman Sachs officials before the Senate, I find it hard to see a credible argument that what the firm did—selling what its own employees referred to as “crappy” investment products to firm clients, and then betting its own funds that those products would end up losers—could be called anything but unethical. Continue reading

Essay: Ending the Bi-Partisan Effort to Destroy Trust in America

Both the Pentagon shooter and the Texas I.R.S. attacker were motivated by a virulent distrust of the U.S. government, the distrust mutating into desperation and violence with the assistance of personal problems and emotional instability. We would be foolish, however, to dismiss the two as mere “wingnuts,” the current term of choice to describe political extremists who have gone around the bend. They are a vivid warning of America’s future, for the media, partisan commentators, the two political parties and our elected officials are doing their worst to convert all of us into wingnuts, and the results could be even more disastrous than the fanciful horrors the Left and the Right tell us that the other has planned for us. Continue reading

The Unethical and Illogical Smearing of Justice Dept. Lawyers

The Senate Republicans, bolstered by the political Right, are angrily criticizing Attorney General Eric Holder for having former Gitmo defense lawyers on the Justice Department anti-terror team.  This demonstrates many things, none of them good, some of them sad.

At least seven Justice Department lawyers previously worked on the legal defenses of Guantanamo Bay prisoners. Apparently this makes them terrorist sympathizers in the eyes of the Angry Right. This is the sad part. A flat learning curve is always sad. Continue reading