Greed to blame?
Of course greed is what motivated the senior management of these companies to allow the misguided risk-taking underpinning all this drama, but there are supposed to be checks and balances in place to prevent this.
However, just as those measures failed in the individual cases of Nick Leeson at Barings and Jerome Kerviel at Société Général, they seem to have failed on a corporate and global level within the financial community. Icahn puts this down to over-compliant boards of directors and it is sometimes hard to see what, exactly, your average board members do to justify their hefty pay packets.
"All too often compliant boards are intimidated by managements in their cushy, well-paid worlds and refuse to rock the boat by asking hard questions and demanding CEO accountability," blogged Icahn. "Why is this so? Because of excessive board compensation and allegiances to those who provide it.
"Lehman's board members were paid just short of a half million dollars each last year"
"Lehman's board members, for example, were paid just short of a half million dollars each last year...Given the massive bankruptcy filing at Lehman, I would appreciate it if someone would advise me of what those board members did to deserve that compensation? Can any board member of these collapsed financial institutions claim to have truly monitored the risks their companies were taking? Did any of them speak up? We may never know, but the effects of their action or inaction is apparent."
While the board members at Lehman Brothers no longer have that job, they do have half a mil in their pockets to help them get over the loss. Likewise many senior managers and traders will also be made redundant, but they've presumably got a buck or two ferreted away from past bonuses, none of which they are required to pay back, so they'll probably get over it too.
