I can’t help woondering–would our crumbling financial giants like Lehman Brothers and Merrill Lynch be in such trouble if they’d followed common-sense ethical principles?
In my award-winning sixth book, Principled Profit: Marketing That Puts People First, I suggest a number of reasons to say no to a sale, focused on core ideas of honesty, integrity, and quality. In other words, successful businesses have standards both for how they behave and for whom they choose to do business with.
So many of the loans coming apart in the subprime crisis didn’t meet the basic criteria of quality–there was no assurance that the borrowers had enough resources to pay back the loans.
Yes, these loans provided a path to home ownership for many Americans who could not have otherwise afforded them–a worthy goal. But those ownerships turned out to be temporary, and those forced from their homes are now in worse shape. Perhaps if proper lending criteria had been applied, the market would have responded by lowering inflated home prices–and those who got burned would have had a safer and more secure path to real home ownership, and the financial titans wouldn’t be fighting for air.
Oh, and one more question: Why was Bear Stearns considered worthy of a bailout (something I wasn’t at all sure was a good idea) but not these latest casualties?