Rabbi Shmuley Boteach: Will Banks and JP Morgan Chase Be More Ethical in the Coming Year?

Tis’ the season to be jolly. Er.. if you’re a Wall Street banker, that is, where billions in end-of-year bonuses are about to rain down like manna from heaven. Wall Street is the one place in America where the economic downturn has not reached. Over the holiday period flashy Ferraris will be fired up and driven off showroom floors. The Hamptons will emerge from a deep winter thaw, warmed by the fires of credit cards working at such a feverish pace that plastic will be hard-pressed not to melt. Oh yes, happy days are here again.

If only the prophet Amos were alive to see it, he might have proclaimed, “Let champagne flow like a river; Don Perignon like a mighty spring.” King David would likewise have cheered, “Yay, though I walk through the valley of the shadow of unemployment, I shall fear no recession, for my government bailouts are with me… My cash runneth over.”

OK, ok. So I sound a little bit envious. I confess. But only a little. I do not begrudge the success of my Wall Street brothers. Not because I have mastered jealousy but because I make a living counseling people whose lives are in crisis. And I’ve discovered that the only thing that buys happiness on this earth is a life lived as a blessing to others. Excessive consumption is naught by a manifestation of the black hole at our center and the human need to fill it with an endless supply of adult toys (OK, calm down. I mean, of course, the more respectable, if somewhat infantile, adult toys of the car, yacht, and plane variety).

Not that there aren’t many Wall Street bankers who fill their lives with virtue rather than Hermes. Many of my former Oxford students run hedge funds and work on the street. The majority of them make money to give it away to the needy around the world and support their families in dignity. They reject conspicuous consumption, live faith-based lives, and are communally engaged.

But they might just be the exception that proves the rule.

There can be little doubt that the success of the banking industry is critical to the success of the overall American economy. But that success dare not be made off the backs of hard-working Americans. Let them Wall Street traders be paid a king’s ransom. Let them eat cake. But when government bailouts are chiefly responsible for their astronomical profits, then they better make darn sure that the spigot is not suddenly turned off for desperate homeowners who need modifications to stay in their homes.

I used to have a much higher opinion of Wall Street and indeed, as I wrote above, many of my closest friends are bankers. But a series of unfortunate incidents soured me, nearly all of them with JP Morgan Chase and its subdivision Bear Stearns. I have earlier written of Bear Stearns’ losing about forty percent of my retirement savings and then trying to triple charge me with fees when another trader moved the money into mutual funds. Wow. You’d think that after everything my wife and I had been through they would at least not try and gouge me. I shared how an old and influential friend at the bank then told me that any attempt to recover the paltry $3900 I had requested, amid losses of tens of thousands, due to consequences of the triple-charging on the part of the young trader, would be labeled extortion. Bigger wow! If you complain they threaten you? Nobody likes to be threatened or bullied so I had no choice but to sue Bear Stearns.

I have tried to settle the suit. Bear is offering a pittance. Still I indicated a willingness to accept the small sum to simply put the matter behind me. This was never about money but about a regular person showing Wall Street that they can’t simply push us around. But the draconian confidentiality terms Bear is demanding is making even a small settlement difficult. As a writer, broadcaster, and columnist, I talk about the state of the economy and the state of our banks as an important barometer of the overall health of our nation’s values. And it seems to me that rather than large institutions like Bear Stearns try to gag people from being critical, especially when it is the only remedy available to us given our weakness in taking on multi-billion dollar institutions, it is better to correct their inner culture to act fairly and ethically in the first place.

The New York Times Magazine recently ran a cover story that seemed like a puff piece on JP Morgan CEO Jamie Dimon entitled, “America’s Least-Hated Banker.” (That’s what passes for a compliment for bankers today.) I would like to believe that he’s a good guy. Perhaps he is the genius they say he is (though I was startled to see writer Roger Lowenstein disclose halfway through the piece that “my mother is friendly with Dimon’s parents.” I kind of wondered why he was selected him to write the profile.) But to prove it, Dimon must demonstrate that he is changing the culture at Bear Stearns and JP Morgan Chase and that he gets that while it’s nice to make bucket loads of money and afford the luxuries of life, it’s even more important to uphold the highest ethical standards while doing so.

Rabbi Shmuley Boteach is founder of This World: The Values Network, an organization dedicated to promoting universal Jewish values in the culture. The international best-selling author of 24 books, his most recent work is “Renewal: A Guide to the Values-Filled Life.” Follow him on Twitter @RabbiShmuley.

Read more: Wall Street, Rabbi Shmuley Boteach, Business News

Anis Shivani: Best Books 2010: 18 On Social and Political Awareness (PHOTOS)

These were some books that really made a mark this year in raising political consciousness about crucial issues. From U.S.-Arab relations to the meanings of “health,” from the corporatization of the academy to the fault lines in the global economy, these books make a significant contribution in clarifying the deeper context of the news of the day.

Read more: Slidepollajax, Middle Eastern Policy, Economic Crisis, Andrew Jackson, Globalization, Pollution, Arab World, Financial Regulation, University, Urban Renewal, Evnrionmentalism, Ecology, Middle East, Israel, Financial Crisis, Health Care, Books News

Bob Burnett: 2010: America Held Hostage

If you were out of the United States for most of the year, or rely upon the mainstream media for all your “information,” you missed the big news of 2010: we’re having a class war and greed is winning. To get their way, the rich are holding working Americans hostage.

In September, new Census figures showed the income gap between America’s richest and poorest was the widest on record: “The top-earning 20 percent of Americans — those making more than $100,000 each year — received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line [15 percent].” It’s one example of what Senator Bernie Sanders called “a war against the working families of America.”

This is not a covert action. Every day there’s a headline that some giant corporation had record profits and their executives got enormous bonuses; often on the same page there’s another story about record unemployment or middle-class folks who lost their homes to foreclosure. The question is why nobody but Bernie Sanders, and a few brave progressives, are willing to talk about our class war.

There are three explanations. One is that it’s become politically incorrect to talk about class warfare In the US. By shouting “class warfare” every time progressives tried to raise taxes for the rich, conservatives have done an effective job of robbing the phrase of its potency. As a result, many Democrats — including the POTUS — run away from any suggestion that this country is turning into a plutocracy and regard it as too “radical” to suggest that Republicans are engaging in class warfare, holding Americans hostage.

Another explanation is that the conservative media has become so powerful that most commentators on mainstream outlets like CNN and the New York Times are afraid to mention the systematic war on working families waged by America’s power elite. It’s a subject that’s not popular with rich media CEOs. And, when pundits do write about this subject, they get a slew of angry mail suggesting they are (gasp!) a “socialist.”

But the third and most troubling explanation is that our fellow citizens suffer from a collective psychosis: Americans think the US can’t operate without the rich and so they are, in effect, protecting them.

Groucho Marx told a joke about a man who complains to a psychiatrist, “My brother thinks he’s a chicken.” The shrink responds, “That’s terrible! Why don’t you tell him the truth?” The man answers, “I would, but we need the eggs.”

Americans don’t tell the truth about the class war because we believe we need the “eggs.” As a nation we’ve developed Stockholm syndrome and fallen under the spell of our captors. We’ve succumbed to the Republican message machine.

Hitler’s Minister of Propaganda, Joseph Goebbels, famously said: “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” That’s what’s happened to our national discussion of economic policy, Republicans have sold the big lie to the American people.

Multiple times every day, GOP talking heads claim “government is the problem” not a broken economic system. Republican shills also contend “trickle-down economics works,” that rich folks buying diamonds and Ferraris catalyzes the consumer economy. It doesn’t — it’s part of the problem — but average Americans don’t see that. They believe that if Rush Limbaugh pays higher taxes it will hurt the economy because he won’t be able to buy as many Arturo Fuente cigars. We’ve fallen in love with the folks running the prison. Rush Limbaugh fans want to be just like him.

While the US is being looted, many American are content to sit in front of their TV and watch American Idol or a similar show that suggests if you are lucky, you too can join the ranks of the rich and famous. Not only are we not angry at the rich, we want to be like them!

What can we do to snap America out of its trance and reverse our nation’s disastrous course? Obviously, those of us who have the stomach for it can continue to write about the class war, tell the truth about what’s happening to our beloved country. But what’s really needed is a coordinated progressive message campaign to counter the evil Republican spinmeisters. That’s what linguists George Lakoff and Drew Westen have been suggesting for two years. We need to counter the Republican spinmeisters with our own 24/7 message: “Your brother is not a chicken! You don’t need the eggs, they’re poison!”

But a positive message starts with a clear statement of what we are for: A fair economy that works for everyone, not just the rich and powerful. An economy where everyone works, where full employment is more important than record profits. An economy that promotes democracy, not hostage taking. This is an economy that operates from the moral basis proposed by Thomas Jefferson, who wrote, “The care of human life and happiness… is the first and only legitimate object of good government.”

Read more: Groucho Marx, Bernie Sanders, Polarization, Class Warfare, Rush Limbaugh, Economic Crisis, Politics News

Economy Recovering Slowly, As Jobs And Housing Stay Weak

A growing sense that the economy is finally mounting a genuine recovery was reinforced this week as the government released several encouraging pieces of data. But the progress appeared modest and still tenuous, suggesting that even palpable improvement to the nation’s fortunes may not yield vigorous economic expansion anytime soon.

As millions of people still struggle to find work, and as many continue to lose their grip on their homes–adding to a still anxiety-provoking glut of foreclosed real estate– many experts anticipate that a significant period of pain may yet lie ahead.

Consumer spending, which comprises roughly 70 percent of the nation’s activity, increased in November–the most encouraging sign of all–and new and existing homes traded hands more briskly than in the previous month, even as those levels were down from a year earlier.

But economists emphasized that substantial pressures continue to weigh on American consumers, raising questions about the intensity and sustainability of any recovery on the heels of the Great Recession. Ordinary consumers are still absorbing the reality of weak household finances, lost wealth, large credit card debts, and gnawing worries about the job market.

Until the economy can again be fueled by spending based on solid and sustainable paychecks–a still faraway moment in the midst of 9.8 percent unemployment–growth is unlikely to be powerful enough to become self-perpetuating, economists said. Ordinary people must first see their finances improve, enabling consumer demand and corporate hiring to start reinforcing each other.

“It’s a mixed bag,” said Chris Christopher, senior principal economist for IHS Global Insight. “Certain things are looking good, and certain things, well, you have to wait and see.”

Even things that are looking better are far from looking great.

Last month, consumer spending picked up slightly, and home sales quickened their pace, according to data released Wednesday and Thursday.

As the holiday season began, consumers increased their spending by a relatively brisk 0.4 percent in November compared to October, according to the Bureau of Economic Analysis. Meanwhile, income grew 0.3 percent in November.

But economists emphasized that these improvements were relatively modest. Spending and income gains were lower in November than in October. They did look much better, though, than a bleak September, when income didn’t grow at all.

Housing sales were similarly lackluster, even as they improved. Sales of previously owned homes increased 5.6 percent in November, while sales of new homes climbed 5.5 percent in the month, according to new releases from, respectively, the National Association of Realtors and the U.S. Commerce Department. But when the yardstick is the same month last year, November’s sales of existing homes were down 27.9 percent from last year, and sales of new homes were down 21.2 percent.

Real estate prices, meanwhile, continue to fall, making homeowners more vulnerable to default and foreclosure, and leaving banks still uncertain about the extent of the losses they may yet have to absorb. That tends to make banks more conservative, hanging on to their dollars as opposed to lending them out. Tighter bank credit puts the clamps on businesses that might otherwise expand and hire.

Indeed, as economists this week tried to assemble a coherent picture from a flood of contrasting data points, many concluded that modest improvements were unlikely to prove sufficient to lead to robust consumer spending.

With the labor market still weak and housing continuing as a drain on the wealth of many Americans, consumers appeared unlikely to spend the dollars necessary to promote a strong recovery.

Once the holiday season is over–and with it, the usual seasonal boost to shopping– consumer spending is expected to diminish before it grows again.

“That pace of growth is not going to stick around,” said Anika Khan, an economist at Wells Fargo. “Consumers are still fixing their balance sheets.”

After many spent above their means in the years leading up to the financial crisis, Americans are now struggling to pay down their debt. That process isn’t easy. During the third quarter, banks wrote off $16.8 billion of debt, accepting losses for loans that wouldn’t be paid back, a recent study shows. On net, consumers increased their debt during that period by $6.5 billion.

Still, even as consumers remain generally cautious–and for good reason–the data released on Wednesday and Thursday amplified hopes of a broader economic improvement. Gross Domestic Product, which measures the total output of the U.S. economy, grew 2.6 percent in the third quarter, according to the BEA.

Other factors are promoting growth. If consumers aren’t driving, they’re at least riding.

“The consumer is able to keep pace with the overall economy,” said Robert Dye, a senior economist with PNC Financial Services Group. “They’re not driving the economy forward, but they are keeping pace.”

Consumers face myriad woes. Even as income grew last month, 9.8 percent of the workforce remains unemployed. Companies, apparently waiting for demand to pick up before they resume expansion, are generally sitting on cash rather than using it to hire workers: Relative to their short-term liabilities, corporations are more flush now than they have been in more than 50 years.

Indeed, corporations are sitting pretty. Since last year, corporate profits have grown a massive 26.4 percent, the BEA data show.

But this boon for bosses isn’t all bad for their would-be employees. Even if corporate cash-hoarding is directly hurting consumers, corporate profits are indirectly helping them. Moreover, the rosy corporate situation seems to be a leading cause of the increase in consumer spending.

Stock portfolios are in relatively strong shape. Even as home prices fell in the third quarter, and homeowners saw the stake they can claim in their most valuable asset erode by 2 percentage points, the net worth of households increased 2.2 percent, according to recent data from the Federal Reserve. As the S&P 500 increased 9.6 percent during the third quarter, the gain in household wealth came almost entirely from the stock market.

Americans’ stock portfolios have made them relatively optimistic, even as home values slide, said Christopher, the IHS Global Insight economist. Consumer sentiment increased this month to reach its highest level since June, according to a Thursday release from Reuters and the University of Michigan.

If home price declines seem obscure to some consumers, stock market gains are relatively easy to perceive.

“You know almost on a daily basis what your stock market holdings are,” Christopher said. “With housing, you don’t know how to respond to it exactly.”

Further, stock gains are helping to offset losses of income and home value, said Bernard Baumohl, chief global economist for the Economic Outlook Group.

“Americans are in a much better position to spend again,” Baumohl said, adding that as consumers take on more debt, they are doing so responsibly, in keeping with their income.

“Households have certainly been taught a lesson,” he said.

Other economists cautioned that a strong recovery is still far off. Christopher called the unemployment crisis an “extreme drag.” Kahn said the housing market is “dead in the water.” Aaron Smith, an economist at Moody’s Analytics, said the recovery has yet to achieve “escape velocity.”

Read more: PNC Financial, Housing Market, Unemployment, Gdp, Wells Fargo, Stock Market, Economic Crisis, Business News, Consumer Spending, Gross Domestic Product, Housing Crisis, Moody's, Business News

Dov Seidman: Ethical Leadership: An Operating Manual

The demand for ethical leadership is growing, yet the supply remains low, as evidenced by the recent credit crisis that sparked the worst global recession since the 1930s. The rising generation of leaders appears equipped merely to navigate rather than to guide. Navigating describes how we naturally react and adapt to an interconnected world while guiding refers to how we forge a sustainable path and build endeavors of sustainable value in an ethically interdependent world.

Fortunately, prototypes of ethical leaders exist, thanks in part to professor Elie Wiesel, the Nobel Peace Prize winner whose work through the Elie Wiesel Foundation for Humanity has been churning out models of 21st century leadership for more than 20 years. Before I say more about Wiesel’s organization, I want to talk about ethical leadership.

In response to the financial crisis, many leaders are rethinking notions about the source of competitive advantage, which increasingly comes from how we behave rather than what we produce. We are rethinking how we lead, by placing less emphasis on carrots and sticks and more on inspiration, and putting humanity at the center of our organizations. These efforts, if they are to succeed, require ethical leadership, which inspires the behaviors in people necessary to create competitive advantage.

Ethical leaders distinguish themselves by doing that which is inconvenient, unpopular, and even temporarily unprofitable in the service of long-term health and value. They view the world as interconnected and develop multidisciplinary solutions to address complex problems that crop up every day. Rather than automatically extending payment terms to a supplier during economic busts, for example, ethical leaders consider the financial stability of the supplier, potential negative impacts to the supplier (as well as to the supplier’s employees and its suppliers-and to the company itself) if payment terms are elongated.

Ethical leaders also consider other solutions (e.g., sharing best practices with suppliers) that may require an investment but generate more value over the long term. Ethical leaders extend trust to their workers, creating the conditions necessary to empower employees, suppliers, and even customers to take the risks necessary to create game-changing innovations. The Ritz-Carlton’s leadership team allows each employee to spend up to $2,000 to address customer issues at his or her own discretion (an example I will expand upon in my next column). What’s more, ethical leadership is a renewable human resource and, for this reason, represents one of the most efficient and practical assets an organization can put to use.

Essay Competition
The hopeful news is that exemplars of ethical leadership exist today. For the past 20 years the Elie Wiesel Foundation has awarded its Prize in Ethics, a competition that rewards college students in the U.S. for viewing human endeavor through an ethical lens. The best of their essays are featured in a new book, “Ethical Compass: Coming of Age in the 21st Century” (Yale University Press).

Wiesel created the contest to connect with people at the most formative time of their lives. My company, LRN, is the foundation’s exclusive corporate sponsor of the prize. We joined together because we shared a belief that to solve some of the world’s biggest problems, we need to help young people embrace a new perspective for being “other regarding.”

The prize is designed to help future leaders develop the skills needed to become great human beings (or guides) and not just “human doings” (or navigators). And the foundation has “quietly operated as an incubator of talent and innovation that would rival Google, Intel and any other Silicon Valley company,” New York Times columnist Thomas Friedman notes in the book’s foreword. “But unlike the technology icons pumping out next-generation hardware and software, for the past twenty years, Professor Wiesel has been hard at work trying to improve our human operating system by inspiring the next generation of ethical leaders.”

Ethical Voices
Here is how the future of ethical leadership looks.

“One should not ask, ‘Is this the wrong thing to do?’ ” writes 1997 Prize in Ethics winner Mark Reed, “but, ‘Is it the right thing to do?’ ” By asking the first question, people immediately turn to policies and rules, and then venture no further. They adhere to the rule, fudge it, or simply ignore it. The second question carries a challenge with the potential to fuel great innovation. If this is not the right thing to do, what other process, product, idea, relationship, or people might we tap to achieve this same objective?

In her effort, 1992 winner Kimlyn Bender examines the metaphorical “masks” we humans use to free ourselves from an innate drive to behave ethically in order to commit immoral acts. “The challenge of ethics today,” she writes, “is to focus not on the masks, but on the individuals behind them and to reawaken within the individual a renewed sensitivity to the moral conscience, bringing every area of life and action under its guidance.”

Zohar Atkins, who won in 2009, frames our responsibility as global citizens. “We are responsible both for being who we are and becoming who we ought to be,” Atkins writes. “Our challenge takes many forms: … to philosophize, question, and critique, and to act, answer, and take a stand.” How do we execute our mission? “The answer is love,” Atkins argues. “… for to love is to say: ‘I am not the master of the world. I am incomplete, in need of another.’ “

We are “in need of another” because our decisions and actions affect so many others in our interconnected world. Hence we need future leaders who are “other regarding,” as Wiesel puts it. In his foreword, he asks, “Have we taught [young people] to develop an ethical compass within?”

The 2007 winner, Magogodi Makhene, makes this argument in more compelling terms when she writes, “My humanity is inextricably linked to yours and unless I acknowledge your humanity in defining my own, I will never realize the highest summits of human experience.” Makhene was writing about her “tear-gassed childhood” in South Africa during the last throes of apartheid. However, her insights can be applied to the decision-making process nearly every 21st century leader conducts.

No country, company, or individual will scale the summits of human endeavor unless we recognize our inextricable and moral interconnectedness to the rest of humanity and start behaving, and leading, in what Elie Wiesel describes as a “society yearning for guidance and eager to hear ethical voices.”

* This story appeared in, and was written for, Bloomberg Businessweek.

Read more: Business Ethics, Values, Education, Philanthropy, Inspiration, Communications, Corporate Social Responsibility/Sustainability, Economy, Society, Business News

Stocks, oil rise in festive cheer

PARIS (Reuters) – World stocks held near the previous day’s two-year high on Friday while oil hit fresh two-year peaks after strong U.S. data this week encouraged investors to maintain their risk…