By Chuck Colson
Last week the Securities and Exchange Commission filed a civil lawsuit against Goldman Sachs charging that the investment bank sold investors a subprime-mortgage investment that was secretly designed to lose value."
When people are no longer restrained by objective notions of right and wrong nothing is safe not your investments not your house not your neighborhood not you! What were talking about ultimately is the moral consensus upon which the rule of law rests thats the very foundation block of Western governments and societies.
The SECs actions set the stage for a protracted legal battle whose outcome is far from certain. What is certain is that absent a change in the moral climate in Wall Street and in all of American life for that matter no amount of litigation will give investors the confidence we need for a healthy financial sector.
The SEC charges that Goldman Sachs sold investments containing mortgage-backed securities which was and is perfectly legal. Goldmans alleged violation of securities law lies in the accusation that Goldman was at the same time betting that the investments would decline in value. Thus while investors lost nearly $1 billion one of Goldmans prime clients made a billion dollars.
Goldman claims the charges are unfounded in law and fact." This did little to calm investors who sent not only Goldmans stock but the rest of the market reeling" after the announcement.
Its easy to see why.
As MIT professor Simon Johnson told the AP the lawsuit undermines" Goldmans brand. Whats more once the SEC starts digging via the process lawyers call discovery" who knows what they might find. Investors are right to be spooked.
But this issue goes far beyond investor confidence.
If the SECs allegations are true then at the very least we are witnessing a real breakdown in ethicspeople ordinary men and women failing to do the right thing." In one sense this ought not to shock us because an essential part of true ethics is the belief that ethics are grounded in some transcendent authority.
And this belief in a transcendent authority is clearly on the wane in postmodern American life.
This is not an academic or esoteric issue.
When ethics fail in the commercial markets more and more stringent regulations are certain to follow. Its the only way to assure the integrity of financial and commercial transactions. But we lose freedom in the process.
The problem is that regulation however well intended cant solve the ethical problem. The best regulation can do is to define what people can get away with by drawing a line they cant cross. It does not answer the question What is the honest way to do business?"
Ethics are so vital to a healthy culture that Professor Robbie George and Ialong with Brit Humeare filming a teaching series on ethics at Princeton. It will be available in the fall and Ill tell you more about it in coming months.
In the meantime Id like you to read a speech I gave on ethics at the Harvard School of Business along with a chapter from my book How Now Shall We Live? You can download both of them for free at ColsonCenter.org.
I can think of few more pressing issues than the restoration of ethics in American life.
Because if people have lost the capacity for doing the right thing for the right things sake then much more is at stake than our economic well-being.
