America in the 1930’s and 1940’s. Scandals have run

America has always had big
businesses helping shape and grow our country. The economic growth can be tied
back to our large financial institutions, especially their investment bankers.

In today’s economy, an investment banker is more of a sales person wheeling and
dealing various products to their customers in an effort to climb the corporate
ladder and gain a great deal of wealth. The practices of the investment banker
have not been a clean and innocent as we would like to believe they should have
been, especially if we are still imagining them as they were back in the 1930’s
and 1940’s. Scandals have run wild in the financial sector over and over, with
what appears to be little movement to change the ethical actions of the current
day salesmen posing as investment bankers.

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Investment bankers used to be the
individuals in banks that you could count on to assist you with your financial
needs to help grow your money by investing in to various funds that would have
a good return on investment, but that was back when there was honestly and
everyone looked out for each other and not just themselves. Investment bankers used
to work for their clients, with senior members of the investment firm holding a
place on their corporate client’s board. The investment bankers worked to gain
a “Seal of approval” from their clients as well as the public, as they felt a
sense of pride and responsibility toward the success of the organization (Lorsch,
Berlowitz, & Zelleke, 2005). The financial markets have changed and matured
over the past several decades, and have bred a top dog mentality, where greed
for wealth has taken place of moral and ethical thinking towards their clients.

Many of today’s investment bankers do not do investments any longer, they are
more of banking salesmen, who sell products to their clients. Clients have even
become wise to these tactics and look to the best option when it comes to their
investments, rather than work on a partnership with an investment banker. All
of the changes in the financial sector has led to the ethical issues of the
investment bankers looking to gain more money, even if it means leaking secrets
or investing in markets they know will grow and provide higher returns. There
is also a high level of conflict of interest when it comes to investment
banking, since the seller is more than likely looking to undercut your profits by
padding theirs.

These ethical issues that have
created many of the past scandals were not something new that simply happened
over night. In 1933 congress passed a bill that called for the separation of
commercial and investment banking, known as the Glass-Steagall Act. The
Glass-Steagall Act was repealed, which then paved the way for commercial banks
to begin to do investment banking. The repeal of the bill was the beginning of
the end, when it came to ethics in the investment banking industry. Many of the
large corporate banks began offering better prices on their investment options,
which lead to the smaller banks having to do something to continue to be
relevant. There was also not very much government involvement to remove
conflicts of interest. Ethical issues continue to be an issue, due to the lack
of qualifications or certifications required to be an investment banker, which
does not allow for stiffer penalties against investment bankers much like we
see punishment against bankers and doctors. With Chief Financial Officers
beginning to take on more responsibilities, the traditional investment banker
was being pushed out, and with the compliance of lawyers and auditors for the
unethical issues we were observing, this lead to the scandals we have observed
in recent years (Lorsch, et al., 2005).

One way that these ethical issues
and scandals could have potentially been avoided, is by not repealing the
Glass-Steagall Act, as this would have reduced the conflict of interest.

Another such way that ethical issues could have been avoided, is we as
Americans had not been so greedy and looked at money as everything. Money will
make people do things that they should not, but if any of the investment
bankers would have had some self-respect, we may have avoided at least a few of
the ethical issues and scandals that we have seen over time. Our government has
also played a part in breading the ethical issues and scandals we have seen by
not being able to appropriately impose stiffer sanctions and penalties against
the corruption of our financial institutions. Gerald Rosenfeld brought up an
interesting point in the book, that a profession
is defined as an occupation requiring extensive training, yet there are no real
criteria that an investment banker must meet prior to earning the title of
investment banker (Lorsch, et al., 2005). Unlike a lawyer who must pass the Bar
to prove their proficiency and credibility to be a lawyer, or a CPA who has to
also earn certification to prove their ability to be an accountant. The lack of
justification for an individual being in a position, proving their proficiency
and ability to lead such a role could help in resolving some of the ethical
issues. If an investment banker were required to take a test an earn some
accreditation for their position, there may be some more willingness to practice
more ethically, as the government would then be able to impose stiffer
punishments on that individual including their accreditation being stripped
which would prevent them from being able to continue in that profession. This
black mark on an individual’s professional record may deter further ethical
lapses from occurring by other members of the organization. There has also been
no advancement in a code of conduct when it comes to an investment banker. This
would be another step in reforming the corruption within the investment banker
world, by setting some sort of standards that would need to be upheld and
abided by for someone to continue being an investment banker.

America has lost much faith in
their big businesses, including the financial sector, but that faith can again
be regained. The greed that American’s have had and continue to have, towards
gaining more wealth than the next individual has clouded our ethical and moral
thinking in the way we do business. If we can get back to a time where we have
trust in our fellow man, and did not feel they were out trying to get one over
on us, we could begin to get back to the morally rich heritage our big
businesses once held. Change does not happen overnight, and it will take time
to worth through the stains of scandal and ethical issues, but as American’s we
are strong and can overcome these issues. Big business has hurt Americans, but
if we all begin to take accountability, our businesses will once again thrive,
ethically and morally. There is work to be done, but trust in American
businesses can be restored.

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