Last year the Senate held hearings into Goldman Sachs’s role in the financial crisis. I wrote at the time that it appeared that Goldman Sachs, the most respected house on Wall Street, had no ethical standards.
Now the other icon of financial rectitude, Berkshire-Hathaway, is under the ethics microscope because of questionable dealings by David Sokol, an executive widely considered to be a possible successor to the revered “Sage of Omaha,” Warren Buffett.
Sokol had purchased shares in Lubrizol Corporation, then recommended to Buffett that Berkshire Hathaway buy the company. He knew (or was pretty confident) that the shares would go up if a deal went through. It did, and they did, netting Sokol a quick $3,000,000 windfall.
Was Sokol unethical? Buffett defended his sidekick, even as he accepted Sokol’s resignation, saying, “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful.” Notice that Buffett was not defending Sokol’s ethics, only his non-criminality.
So was Sokol being unethical? Sure—I think so, but more importantly, so do 21 of 23 top U.S. investment bankers, according to a poll by Reuters. Only one of the bankers in the poll said Sokol’s behavior breached no ethics or rules.
So investment bankers do have ethics. Now if Reuters would only ask them what they think about the top one per cent of the population earning 20 per cent of the national income and owning 35 per cent of the national wealth…