Photo by respres“Strategic default” is the term used to describe the decision to walk away from an underwater mortgage. The terms of a mortgage contract spell out the responsibilities of all parties, and include a list of consequences for borrowers who fail to live up to their part of the bargain. Some homeowners, after looking at the terms of the contract, are concluding that they are willing to live with those consequences. But are there moral and ethical implications to this? Read the article here. You can download the discussion paper referred to in the article here.
Marketplace Money had an interesting piece, with Henry Blodget, CEO of the “Business Insider,” and Megan McArdle, of the “Atlantic” magazine debating the propriety of walking away. You can hear that piece and read the transcript here.
Excerpt from the Arizona Republic article:
Arizona law professor Brent White says the only thing standing between many “underwater” homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong.
White, an associate professor at University of Arizona’s James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media.
It started with a 50-page discussion paper he published in October, in which White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally.
“I’m all for a society where people must take personal responsibility, but that should also apply to the banks and financial institutions,” he said.
Photo by dbkingThis is a very good article, full of links and references, covering not only the Citizens United case but also the issue of corporate personhood. I’m somewhat surprised at the reaction to the court’s decision in this case. As noted in this article, the US Supreme Court has previously established that corporations are persons in the Santa Clara County v. Southern Pacific Railroad decision of 1886 (yes, I know that there are disagreements about the implications of that decision, and I don’t like it, either). As a result, no one should be surprised that they have been afforded the protections of the Constitution. What we really need to be doing is to be rethinking the whole corporate personhood model.
Read the article here.
News outlets and the blogosphere are abuzz with reactions to Thursday’s Supreme Court decision that will allow corporations to fund political campaigns. The ruling, which overturns decades of legal precedent and legislation limiting the ability of corporations to influence the outcome of elections, may have broad implications for the political process in the U.S. News of the decision has drawn criticism from both the right and the left, many voicing the opinion that dramatically increased rights for corporations will significantly diminish the ability for individual citizens to have their voices heard.
You may also find this article of mine to be of interest: “Capital” Punishment: For Corporations That Violate the Public Trust
It’s good to see a renewed emphasis on ethics in UK business schools. But what about here in the US? Read the article here.
As the bodies responsible for teaching so many of the “masters of the universe” who did so much to cause last year’s economic meltdown, it is perhaps not surprising that business schools have spent the past year doing some serious soul-searching about their culpability for the recession.
Go back to the 1980s and 1990s, when many of today’s corporate leaders were studying for their MBAs, and business ethics and sustainability – in other words, issues around corporate governance, social responsibility and long-term decision-making – played little part in business school curricula.
Pre-credit crunch, the need for MBAs to be “ethical” as well as show you how to fast-track your career and make a load of cash was not that high on the agenda, concedes Mark Stoddard, accreditation projects manager of the Association of MBAs (Amba).
“Schools have recognised there have been gaps and they have needed to make changes in the way MBAs are taught,” he says. “Three to four years ago you might have got students complaining about having to take ethics courses. You don’t now.”
Interesting blog, with a focus on business ethics as an academic discipline.
From the blog:
This blog is a result of my experience as both a business owner and as an employee during which I came across a wide variety of ethical and moral issues.
During a long career in international business including a number of e-commerce ventures – I’ve realized the importance of proper business ethics training to meet the growing challenges in the 21st century workplace.
Not only are these issues complex – many haven’t been seen before due to the rise of the internet, technology and the sweeping changes made to the way we work.
Globalization and the necessity to deal across cultures – what may be okay and permissible in one culture being taboo in another. Today even many small businesses outsource – and there are issues in that as well.
Hopefully this blog will seek to address many of these issues and more.
“The Centre for Excellence on Corporate Social Responsibility is being developed by The Canadian Institute of Mining, Metallurgy and Petroleum as one of the four pillars of the Canadian government’s action plan on CSR, Building the Canadian Advantage announced in March 2009. Over the coming year, this site will become the hub of knowledge on CSR-related practices and approaches as they apply to the extractive sector. The focus is to help Canadian companies doing business around the world, provide tools and information for all stakeholders, and to raise the bar for excellent CSR-related practices in the extractive industry.”
Not a good week for Johnson & Johnson, a company long considered by many to be a good example of corporate social responsibility. Earlier this week, the company expanded their recall of Tylenol and other products, but only after an FDA investigation revealed numerous problems that one of the company’s facilities. Now, the company is accused of paying kickbacks to nursing homes, in order to boost the use of a schizophrenia drug. Read the article here.
TRENTON, N.J. — Federal prosecutors said Friday that health care giant Johnson & Johnson paid tens of millions of dollars in kickbacks so nursing homes would put more patients on its blockbuster schizophrenia medicine and other drugs.
In a complaint filed Friday, prosecutors said J&J paid rebates and other forms of kickbacks to Omnicare Inc., the country’s biggest dispenser of prescription drugs in nursing homes. Prosecutors allege Omnicare pharmacists then recommended that nursing home patients with signs of Alzheimer’s disease be put on the powerful schizophrenia drug Risperdal, which was later found to increase risk of death in the elderly.
The allegations are in a complaint filed by the U.S. Attorney in Boston, whose office has joined two whistle-blower cases. One was filed in 2003 by a former Omnicare pharmacist in Chicago, Bernard Lisitza, who alleges he was fired after he challenged the Risperdal kickbacks and other improper practices at the company. The other was filed by former Omnicare financial analyst David Kammerer in 2005, after he resigned from the company.
Read more… The New York Times also has an article here.
Johnson & Johnson has long been lauded as a champion of corporate social responsibility. Their handing of the 1982 Tylenol recall has been used as a case study for the proper management of a company in crisis. (Just google “Johnson & Johnson Tylenol case study” – a good example of which is located here.) This time, the company appears to have handled the situation differently. Read the article here.
In a moment of startling corporate clarity, Johnson & Johnson recalled all its Tylenol from US store shelves in 1982 after capsules tampered with in Chicago were linked to six fatalities.
The move cost the company $100 million and threatened to decimate its leading share of the market. Instead, consumers applauded the company’s openness and sales rebounded within a year. Three decades later, the move is still regarded as a shining example of corporate social responsibility.
The time it took the company’s CEO to make that gutsy call? Six days.
On Friday, a unit of Johnson & Johnson expanded a recall of Tylenol products to other over-the-counter medicines, including Benadryl, Motrin, and Rolaids, because of reports of nausea and other symptoms. The time from those initial reports to Friday’s action? Twenty months – and only after the Food and Drug Administration (FDA) had finished an investigation that found multiple problems at the Johnson & Johnson factory.
Fortune magazine named Apple the most admired company in the United States in 2008 and in the world in 2009. This certainly doesn’t sound admirable. Read the article here.
In a repeat scenario from last January, Apple Inc. is contesting two petitions from shareholder groups to increase the company’s environmental efforts, according to Apple’s proxy statement, reports EE Times. Two of the proposals call on Apple to establish a board-level sustainability committee, and to report how the consumer electronics company will reduce greenhouse gas emissions and address other environmental and social issues such as toxics, recycling and employee and product safety, according to the article.
In January last year, Apple opposed a shareholder resolution that would require the company to publish a corporate social responsibility (CSR) report, despite unveiling a number of new green products.
Apple’s board is rejecting both petitions this year, stating the company has taken appropriate steps to protect the environment including posting information at its Web site since August about its carbon footprint and recently released products, reports EE Times.
Photo by adria.richards
Hey, Google. It’s about time. Read the article here.
Google launched its Chinese-language search engine, Google.cn, in January 2006. The company said at the time that it did so in the belief that a search engine would help open access to information for Chinese residents. To obtain permission to operate in China, however, the company had agreed to censor search results that the Chinese government deemed objectionable. Google was harshly criticized by civil liberties groups for its concession to Chinese authorities.
The company now appears to be regretting that decision.
“We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech,” Drummond wrote Tuesday about the company’s reversal of its position in China. “The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences.”