Something remarkable happened in the world of the richest men on earth. Bill Gates and Warren Buffet, who dedicated most of their lives to accumulating as much wealth as possible, decided to give nearly all of it away - in their lifetimes. Why? To help those who cannot help themselves. And even more than that, they have asked their peers to do the same (the Giving Pledge) – give it all away.  If you don’t see this as unusual, think again. This act represents one of the most extraordinary moments in global economic history.

Rich men (I am leaving women out purposely) do not give their money away easily. After all, it represents their life’s work. Their wealth supports their egos, power and position in the top levels of gazillionaire moguls. We imagine a secret society of power players divvying up the world’s wealth for themselves with no regard for those without. When you give your money away, you give your power away too. It’s emasculating. Male virility shrinks with one’s portfolio. Big swinging….well, you know the rest.

So why would the world’s two richest men give it away?

It boils down to an evolving sense of social conscience – the deep belief in individual responsibility to help relieve human suffering.

Perhaps we all have this mandate to some degree. We call it charity, tithing, philanthropy. Yet social conscience goes beyond those traditional labels to the depths of our being. We are not simply writing a check for a “good cause” or attending a gala with our social set. We are investing ourselves in creating a better world.

The innovative David Miller, who heads up Princeton University’s Faith and Work Initiative, writes, “We all have greater capacity than we realize to live lives of radical generosity. We can do it with our time, treasures, and talent.”

The new giving pledge is a part of our consciousness. We give, because we must. However humble, all of us can affect someone else’s life in a positive way through kindness, compassion and generosity—not for the kudos, but for the personal satisfaction of knowing we are part of a giving (not taking) world.

Beyond Noblesse Oblige

Commitment to philanthropy is nothing new. Noblesse Oblige has dictated that wealth and privilege requires the responsibility to serve society. No one embodies this more than the UK’s Queen Elizabeth II. In modern monarchal systems supported by the taxpaying public, royals know the part they play in balancing the scales of privilege—lest they lose their heads. Modern royals have given moguls a model for social responsibility.

We have come to a moment in the evolution of humankind where we recognize that each of us has co-created the world we live in—the good, the bad and the ugly. Each of us is responsible for the state of our fellow inhabitants. Each of us has the power to change our world to a more caring place.

Apathy is a direct act. If we do nothing; we are part of the problem. It is a clear statement of “I accept all that is and will make no effort to change it.”

For those of us like myself, who do not, cannot, will not, accept all that is—we are called to fight. Like spiritual warriors, we charge into the Battle for Goodness. It is our mission to usher in the change that we know, as consciously evolved human beings, is our purpose here on earth.  In the fight against the ugliness of gluttony and the violence of greed, compassion is our sword. Arm yourselves and get ready for battle.

Contrary to outdated beliefs, compassion is not weak. It represents love and love is the strongest force in the universe. It is the very essence of what we live and die for. It takes great courage to love in an unloving world, great courage to show compassion in a culture that reveres aggression, great courage to stand up to destructive forces of power and say: Enough! You have had your time at the top. We are taking our world back.

Only the strongest among us can do this. It requires us to push through the status quo of who has more, and those that want only more for themselves. It forces us to not play both sides by catering to the self-serving while claiming concern for humanity, or placing self-interest above social conscience. Love inspires us to recognize that we are indeed at war—with corruption, greed, injustice and the brutal inhumanity of top down economics.

If we say yes to social responsibility, we are saying yes to the fight for Goodness and the hope of transforming humanity from a culture of hate and selfishness to one of compassion and community. All of this brings me back to the Giving Pledge and the example of two business titans, Gates and Buffet, who are galvanizing the troops to create a better world for us all.

It is a giant leap forward in the evolution of human civilization for power and privilege to finally join the Fight on the side of Good.

©2010 – All Rights Reserved

Monika Mitchell - Executive Director  

www.good-b.com/blog

The issue of restitution is front and center in the Gulf. How does a publicly traded corporation like BP compensate business owners and workers who suffered severe economic loss due to its negligence?

In our survival-of-the-fittest world of capitalism, the traditional response is “tough luck sucker” if you are on the losing end of the deal. In the late 20^th century model, compensation for BP’s mistakes would not even be on the table.

No one compensated Katrina victims for lost homes and businesses despite the fact that the City of New Orleans and the State of Louisiana were directly responsible for building inadequate levies. No one paid hundreds of thousands of entrepreneurs and small business people for lost incomes when a few dozen mortgage securities firms collapsed the economy.

In the second decade of the 21^st century, who pays the price for failure?

The tide is changing when it comes to corporate responsibility and economic fallout. BP in the eyes of the President, Congress and much of the nation is obligated to repay lost income for Gulf residents. This could include everyone in that region.  The tragic accident will affect the lives of the people of the Gulf for years to come. The simple question remains, how much to compensate lost income is fair and just?

Under pressure from the White House, BP has publicly promised to compensate Gulf businesses through a $20 billion “Victims’ Compensation Fund.” Obama’s aides said if needed the government would “force” BP to compensate victims and claim that “we have the legal authority” to do so.  An official spokesperson stated, “We’re confident that this is a critical way in which we’re going to be able to help individuals and businesses in the Gulf area become whole again.” The White House is unequivocally convinced that negligent companies that interfere with livelihoods must pay the price for that economic disruption.

None other than Kenneth Feinberg, social justice compensation King, has been sent to the Gulf to fix the unfixable. Feinberg was the one accomplished diplomat and lawyer who compensated families of victims after the September 11 attacks. Somehow, he managed to maneuver the tempers and high emotions of the restitution process and still come out with his reputation for fairness and sensitivity intact. Feinberg says of the BP fund payouts, “This program I am running is absolutely voluntary — nobody has to do it. It’s my opinion you are crazy if you don’t participate.” Participants like their September 11 brethren must sign a waiver not to sue BP or the federal government if they accept compensation from the fund.

The two-part repayment plan begins “with the relatively easy process of getting emergency payments, available without obligation to eligible claimants who can prove their losses, up to six months’ worth of damages at a time. (BP has paid out more than $200 million from 36 claims offices to more than 32,000 claimants so far.) Then, 90 days after the well is plugged, comes the tougher phase of the three-year program: negotiating with each claimant for the lump sum to cover economic losses from the spill.”

Receiving compensation from a company to pay for their negligence is nothing new. Among many corporate settlements, the pharmaceutical giant Merck settled claims for its deadly Vioxx in the mid 2000’s. In the 1980s, A. H. Robins Company paid victims $2billion to compensate for defective Dalkon Shield birth control devices. Both companies fought allegations that their zeal for profits allowed them to ignore known dangers of their products. Such allegations are being levied at BP. 

What sets the BP fund apart from other corporate negligence debacles is that the product BP was selling is not the issue; the process from which it was sourcing that product is at the heart of the matter. BP has harmed the ecosystem we all rely on. Its fund participants are those whose livelihoods are directly derived from that system. By damaging the delicate balance of nature through its pursuit of profits, BP has interfered with the life and livelihood of Gulf residents.

This is a ground breaking shift in the way we look at corporate responsibility. The United States federal government and the mega-corporation BP have set an important precedent. Those victims who can prove loss of income directly due to a company’s negligence and/or misconduct are due to be compensated for those lost revenues.

The folks in the Gulf are soon to be paid emergency funds to help them weather  this challenging time and the difficult months ahead. All of America’s hearts are with them. We hope and pray they are treated fairly and justly. BP is already accused of putting mountains of paperwork ahead of real payment for those struggling to survive like fisherman, tourist industry professionals and any other business reliant on a healthy Gulf.  The direct connection between the BP Oil Spill disaster and their livelihood is clear. Any other response would be even more tragic on the part of BP and the Feds.

A New Level of CSR

It brings to mind another group of people who have lost their incomes directly due to the negligence and misconduct of global corporations: the victims of the subprime mortgage markets and the credit crisis.

In New York, California, Arizona, Nevada, Florida and across the nation, there are hundreds of thousands of such victims. As a former partner in a Wall Street recruiting company that directly supported the work of Good Business International, my firm lost two solid years of revenues as a result of the misconduct of the subprime mortgage securities industry. Yet we are only one business of many that experienced this harsh reality.

Construction companies, builders, retail stores, landlords, real estate professionals, regional bankers, employees of non-mortgage related banking and small businesses like dry cleaners, newspaper stands, restaurants and dozens of others have been devastated economically.

Errant subprime lenders like Wachovia, Washington Mutual, Countrywide and Indy Mac have paid their top executives multi-million dollar compensation packages while declaring bankruptcy and simultaneously bankrupting thousands of entrepreneurs. Firms like AIG, Fannie Mae, Freddie Mac, Goldman Sachs, Bank of America, Morgan Stanley, Citigroup, JPMorgan and Wells Fargo have received hundreds of billions of federal taxpayer dollars while impoverishing directly related businesses.

The question arises then, where is the Subprime Mortgage Market Victims’ Compensation Fund? As an entrepreneur in a financial services or real-estate business, you may have lost your entire source of income due to the inappropriate and borderline criminal actions of specific companies and never recover a dime. This economic disaster and continuing credit crisis has changed the lives of many of those dependent on the financial industry for years to come. Yet who has paid the price for the failure of the subprime mortgage markets and its economic fallout?

So far no one responsible has paid any compensation to those who were victimized by their negligence and misconduct. The rating agencies, securities firms and commercial banks continue to book record profits while millions of small businesses close their doors.  

Based on the response to victims of the Gulf disaster, it seems high time such a fund is created to compensate small business people who received no compensation, no unemployment insurance, no restitution of any kind after suffering huge income losses at the hands of the big bailout banks. 

Beyond personal injury lawyers, perhaps a new legal specialty has formed in the wake of the BP tragedy: income injury law.

Let the trials begin.

©2010 – All Rights Reserved

Monika Mitchell - Executive Director  

www.good-b.com/blog

Fortune Magazine reports that Wal-Mart hit the top of the revenue charts again in 2010 beating out the big boys like Exxon Mobil in insatiable profits. Also in the list of top revenue producers are eight bailed out companies: General Electric (3), Bank of America (7), J.P. Morgan Chase (9), Citigroup (12), General Motors (15), AIG (16), Wells Fargo (19), Freddie Mac (54)….

AIG, made the list? Freddie Mac? Citigroup? GM? Aren’t these more like Misfortune 500 companies?

Question: How can you be completely mismanaged, virtually insolvent and held up by taxpayer billions and still make the Fortune 500 list? That is the Trillion Dollar question.

Answer: What constitutes a “great company” for Fortune Magazine is entirely based on numbers, however creative those numbers may be. The 500 List doesn’t consider how many employees lost their jobs, how many worker benefits were cut, how many millions of American families were rendered homeless, and how many of America’s 15 million unemployed and 15 million under-employed lost their medical insurance and ability to feed their families due to the distorted and singular pursuit of revenues by Fortune’s “Best.”

The top dog position this year falls to discount king Wal-Mart. Fortune asks the question:
“Is Wal-Mart Stores a great company, or what?”

How exactly does Fortune Magazine define “great?”

2010 Fortune 500: Wal-Mart back on top
“The mega-retailer knocked Exxon Mobil out of the top slot to rule the Fortune 500 again this year. Wal-Mart managed to lift revenues, on top of a big increase in 2008, by attracting bargain-hungry customers from competitors with remodeled stores and inexpensive private-label goods, offering everything from frozen pizza to patio furniture in one stop. A single trip also meant less spending on gas. Result: Profits surged a whopping 7% to $14.3 billion.”

Wow, that sure is a lot of frozen pizza. So what is the secret to Wal-Mart’s success? Maybe we can learn something about being “great” from Wal-Mart’s example.

In recent years Wal-Mart has gone green, not with envy but with sustainable business practices –at least that is what we are told.

Naturally wherever the retail giant can save money by cutting back on energy usage and recycling goods would make perfect sense for Fortune’s Number One. But making Wal-Mart the poster child for environmentally sustainable practices would be a big pill to swallow for most of us. (Didn’t we already do that with BP?)

As for integrity some of us cannot forget Wal-Mart deliberately mislabeling foods as “organic” only three years ago.  Nor can we forget the internal memo released by top management to encourage high employee turnover and “dissuade unhealthy people from coming to work at Wal-Mart” to save on healthcare benefits and wages.

But people change and so do companies. Perhaps the “Top Company in America” is a role model for us after all. So just what is the Greenest of Green discount retailers doing today?

Wal-Mart Stores, the $14.3bn revenue producer, is flexing its big legal muscles to fight a $7,000 fine issued by the Occupational Safety and Health Administration (OSHA) for failing to protect the safety of a minimum wage worker who was trampled to death in November 2008.   Wal-Mart, who agreed to a settlement with the Nassau County District Attorney to avoid criminal charges, does not feel the fine is fair. Why is it unfair? Because “crowd trampling” is not an occupational hazard that retailers must actively prevent says the big WM.

Excuse me Wal-Mart…an occupational hazard would be any danger on the job.  Two thousand people queued up in front of a store sign that said, “Blitz Line Starts Here” and a 34-year old temporary worker was stomped to death in the rushing surge for a $300 laptop. It seems safe to conclude from this event that crowd danger is an occupational hazard.

This incident reveals a lot about the 2,000 Wal-Mart customers who were clearly more interested in a bargain than respecting human life. The case also reveals a lot about Wal-Mart’s business practices. Birds of a feather you know…

Wal-Mart believes that paying the small sum of $7000 would set a precedent to make them legally responsible to safeguard workers against errant crowds. And they don’t want to be responsible for that—legally or otherwise.

To make their position clear, Wal-Mart has filed 20 motions, 400 pages of legal briefs, and spent 2 million dollars in legal fees. The case is costing taxpayers millions too by demanding nearly 5,000 hours from OSHA legal eagles. In the NY office, 17% percent of attorney hours are taken up with defending the negligence fine levied against Wal-Mart.

OSHA states that Wal-Mart failed to protect employees from “recognized hazards” and to prevent situations that were “likely to cause death or serious harm” due to “crowd surge or crowd trampling.”

Wal-Mart’s official response: “We are committed to learning from the incident and making our stores even safer for customers and our associates.“

Actions always speak louder than words. Wal-Mart’s fierce battle to avoid the fine says more about company values than any amount of legal briefs or PR. The attorney for an injured shopper states, “They don’t want to take responsibility realistically for what they did.”

So in answer to Fortune’s $14.3bn question:  Is Wal-Mart Stores a great company, or what?
If “great” means only bottom-line profits, maybe so.

But if “great” includes the human-bottom line that requires a company to place the sanctity of life and dignity of human beings ahead of profits?

Or What.

At the Global Leaders Summit last week, an octogenarian economics professor from a Southern German university asked, “But will it be enough?” He was referring to the financial reform agreement reached in Congress and passed by the House this week that President Obama calls “historic.”

There have been quite a few references to history lately by self-congratulating politicians. Is the exemption stuffed financial reform bill of 2010 really a history-making event comparable to Great Depression reforms? As the seasoned professor asked, will it be enough to rein in an out-of-control financial industry? Or in the words of one NPR broadcaster, is it inevitable that no matter what kind of reforms are enacted, “Wall Street will find a way to blow itself up?”

A simple look at “history” reveals there was a time when Wall Street was not able to detonate. Economist and financial historian Glyn Davies (A History of Money) writes that following the banking reforms of 1932-1935, “significant bank failures, of the kind that inevitably plagued the unit banking system of the U.S. for 150 years, had been ruled out by the reforms.” Davies points out that from 1920-1930, nearly 5,000 U.S. banks failed. In 1930-1933, 8,812 banks failed. Yet after the banking reforms, the annual average of bank failures fell to 45. In the boom years of 1943-1960, bank failures never exceeded 9 annually—a truly amazing feat after a century and a half of panics and crashes.

It was not until Ronald Reagan and the repeal of Depression Era banking safeguards that the tide began to turn. Under the “Gipper,” the formerly highly regulated Savings and Loan industry became a free market piggy bank for Wall Street masters of the universe. The safe and secure regional banking system was robbed so thoroughly that it ceased to exist. It took taxpayer billions and deep government deficits over the next decade to restart its engines. Sound familiar?

The deregulation continued through the 80s and 90s to reach its crescendo under Bill Clinton with the repeal of the 65 year separation of banking and trading (1999) and the legalization of under-the-radar weapons of financial mass destruction (2000).

A quick history lesson:

Steve Kroft of 60 Minutes reported in October 2008, that the global credit crisis “was magnified worldwide by the sale of complicated investments that Warren Buffett once labeled financial weapons of mass destruction…credit derivatives or credit default swaps.”

These derivatives are “a form of legalized gambling that allow you to wager on financial outcomes without ever having to actually buy the stocks and bonds and mortgages. It would have been illegal during most of the 20th century under the gaming laws, but in 2000, Congress gave Wall Street an exemption and it has turned out to be a very bad idea.”

So it seems that Wall Street was not able to blow itself up when strapped down with heavy bindings called banking reforms. For fifty years, from 1932 until 1980 and the first of the banking deregulatory acts by Congress, Wall Street was not legally allowed to plunder the nation’s coffers. Yet despite those restrictions, Americans enjoyed steadily increasing prosperity for three post war decades.

What happened in the 70s? The first big oil embargo and the nation lined up at the pump and watched inflation fluctuate with gas prices. To combat inflation, Federal Reserve Chairman Paul Volker (1979-1987) manipulated prime interest rates to the obscene level of 21.5% in 1980. In the 1970s and 80s, it was not uncommon for the average home mortgage to cost 10-12%. No wonder the move to deregulation gained momentum.

Well, the old economist is at again and still going strong. This time his ban on proprietary trading (trading one’s own capital) for the big banks dubbed the “Volker Rule” made it into the final version of the bill. Banks no longer have the ability to invest more than 3% of their capital in private equity and hedge funds. (Actually 3% is pretty big when talking about banks capitalized at $10bn plus. Deutsche Bank analysts alerted investors that the final regulation was substantially “watered down.”)

The belief by Volker is that the self-interest of proprietary trading interferes with customer interest. An investment firm might be more concerned about its own money than say … a client’s.

Okay, good thinking Paul and what an accomplishment that this provision made it into the final bill. Hmmm. There is one teeny weeny issue. Banks have until 2022 to wind down their prop trades. Let’s see… it is now 2010, so that is 12 years, 3 presidential elections, two Senate terms, and six House of Representative elections.

Lobbyists, on your marks, get set, go! You have 12 years to turn the clock back before the Volker Rule is set in stone. Mr. Volker will be 94. Were they trying to see who would be left standing – the banks or the Old Fed Chairman?

Where is Scott Talbott, lobbyist extraordinaire of the so-called Financial Services Roundtable (think Knight) when you need him? Don’t let Scott’s peely-wally fade-in-the-woodwork demeanor fool you. This guy only fades in the woodwork after dark. The rest of the time he is slivering through the halls of Washington’s world of money. Talbott’s official response to the Dodd-Frank Act is that banks will earn “less profits.” That is lobby lingo for “Slap me five! “  

Even with such “historic” reform, banks that were too-big-to fail before are now more cocky and confident than ever. The U.S. economy continues to be controlled by the six big swinging banks. And for some inexplicable and rather remarkable reason, Goldman Sachs and Morgan Stanley are still bank holding companies capable of borrowing from the Fed at zero percent. Say, does anyone know if Goldman offers free checking?

Still on the books is the repeal of the Net Capital Rule that until April 2004 had limited large banks from borrowing more than 12 times its assets. The rule was overturned at the SEC at the request of former Goldman CEO Hank Paulson (among others) allowing the big financial institutions absolute freedom in terms of leverage. This limitless borrowing encouraged high-risk trading and exacerbated the credit crisis multiple times. Goldman, for example, went from 12-1 debt to assets in 2004 to 25-1 debt to assets in 2008. The greatest abusers of this lack of regulation however were Lehman Brothers and Bear Stearns who were levered around 35-1. You know how that ended.

So while the historic Glass-Steagall Act of 1932 had no fuzzy wuzzies and separated boring banking from risky gambling with a meat cleaver as Salon.com wrote, the “historic” Dodd-Frank Act is warm and fuzzy all over.

Only “below par” credit-default swaps are required to be traded through a clearinghouse (exchange). Who decides which swaps are “high-grade” or “below par?” Credit rating agencies – the same ones, Moody’s, S&P and Fitch that blew the markets up in the first place – now have the power to rate swaps.

Rating agencies hover somewhere on par with Bernie Madoff on the trust meter these days. What were our legislators thinking? I guess they were bleary-eyed towards dawn as they hammered out the bill.

There are so many exemptions in the 2,300 plus page bill that the real question is – will there be anything of real reform left when the dust settles?

So I ask you – does this sound like history-making banking reform? Or does it sound more like history repeating itself.

Hell hath no fury like a lobbyist scorned. Congratulations Scott.

©2010 – All Rights Reserved

Monika Mitchell - Executive Director  

www.good-b.com/blog