Race to the Top

As highlighted in an ERM Current™ blog entry last week, Goldman Sachs' CEO Lloyd Blankfein delivered a speech to the Council of Institutional Investors regarding his views on what contributed to the current financial crisis.  He offered a challenge to other financial institutions in his closing remarks below.

Though honest disagreements will occur, the best companies don't shy away or selfishly frustrate efforts to compel better industry practices. These companies recognize that they are the first to benefit from better standards, especially if their business requires extensive dealings with partners or counterparties. But, we have to recognize a higher responsibility: to speak up, to draw attention to potentially destabilizing trends and to act like an owner responsible for the integrity of the system.

During the past several years, we have witnessed a "race to the bottom" in terms of poor decision making, lax risk controls and weak regulation.  Let's hope Mr. Blankfein's viewpoint signals the beginning of a new "race to the top".