In New York Times Article, Harvard Prof Suggests That “Good Bankers” Should Be Left Alone October 21, 2009

In an article that was published in yesterday’s New York Times, Harvard Professor Bill George suggests that by painting bankers as greedy and without regard for their fiduciary duties with a broad brush, “The danger is that we will punish healthy banks for the sins of failed banks,” when “Most bankers have behaved responsibly throughout the crisis.”

Admittedly, it is hard to argue with his assertion that is a danger of excessive regulation which will hamper the banks’ abilities to start lending again, particularly to small businesses. On the other hand, and ironically, Professor George’s own hand lends substantial credence to the argument that the Wall Street culture remains seriously and fundamentally flawed. In particular, he notes that the boards of AIG and Wells Fargo voted to increase their executives’ pay to “unprecedented levels” to offset proposed legislation that would limit their bonuses.

Maybe I’m missing something, but I don’t understand why the bankers feel that they have some G-d-given “right” to high (read: obscenely high) compensation – regardless of the performance of their clients’ investments and retirement accounts; this is a phenomenon that simply does not exist in any other industry. In my view, so long as they don’t face any personal risk, financial or otherwise,  for their actions, they are unlikely to own up to their fiduciary responsibilities to their clients – the general public.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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