Former VP of Lehman Brothers visits DePaul University

Lehman Brothers was a company that provided financial services to many countries. It was a primary dealer in the United States according to a New York times article on the 15th of September. On September 15, 2008 the company filed for Chapter 11 bankruptcy. What caused them to became bankrupt? The simple answer would be bad mortgage finance and real estate investments.

On Wednesday January 20th, Lawrance G. McDonald came to DePaul University to promote his book "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers." He was once a former VP of the company. Lehman Brothers were ignoring the risks that they were taking. They used mark to market accounting to determine the worth of mortgages. Chief Officers knew the dangers but were silenced by people higher than them according to Mr. McDonald.

Mr. McDonald felt that the bankruptcy could have been avoided. He mentioned a few solutions for other companies would not fall to the same fate. He thinks that CEO's should have a term limit. He believes that if you maintain power too long, you start to abuse it. Richard Fuld held the CEO position at Lehman Brothers for 14 years, until it filed bankruptcy. According to Mr. McDonald there should be a risk committee on the board. That way the company can better evaluate the risk that they take. He also believes that former CEOs should become board members.

I agree with what Mr. McDonald states. CEOs should not hold that position of authority too long. It should be like a democracy and vote in the next CEO with a limited term. Having a risk committee can prevent or stop bankruptcy from happening. Just like Enron, they ignored the risks that they were taking and lost everything in the process. Former CEOs as board members can be beneficiary in helping manage the company. They can put their input, but the currant CEO still has the final decision. All in all, what Mr. McDonald broght up, seems to make sense. Maybe if we implement these rules in businesses, it could help save jobs and the overall stability of a company.
http://www.nytimes.com/2008/09/15/business/15lehman.html

Haiti Relief Efforts- Aristotle in the News

On January 12, 2010, an earthquake hit Haiti at a 7.0 on the rictor scale. Thousands of people are homeless and have nowhere to go. The Chicago Tribune posted an article on January 15 about the relief efforts for the people of Haiti. Individuals have been giving money and canned goods to help the people of Haiti. The response to the disaster has been so high that now anyone is organizing an effort to help. Authorities have warned that freelance philanthropy might only get so far.

Aristotle might state that the best way to help the people of Haiti is to donate food and cloths instead of money. What they need now is the basic necessities to stay alive. Money is only the instrument to acquire the necessities of life. Instead of giving money, it is best to give them what they need instead of the instrument. In order to help them, we first need private property. According to Aristotle, there is a "pleasure in doing a kindness or service to [others], which can only be tendered when a man has private property." Hence, we need private property to do good for the people of Haiti.

I belive that Aristotle has a point. We should give canned goods and cloths instead of money. Now, especially, because there are alot of people that are starting up philanthropy efforts that can be a scam to steal our money. That is what authorities are warning people that are trying to help. Plus, the people of Haiti need food to stay alive in the defistation. What can they do with money, if they have nothing they can use it on, when most of their area has been destroyed. Aristotle states that we need private property. In order for us to help them we need to have private property. If we had all things in common, no one would set an example of liberality according to Aristotle.