Is there a distinction between what is legal and what is moral?

In the past several days there have been a number of radio interviews discussing the role of the investment banking firm Goldman Sachs in the recent financial crisis. A particularly theme has been the manner in which Goldman partners not only survived the crisis, but profited by simultaneously selling securities to clients and “taking bets” that those same securities would become valueless. In Congressional testimony, Goldman executives defended this as a practice that was legal and therefore perfectly acceptable. They seemed puzzled that questioners believed their could be a distinction. I was reminded of a question that Senator Sam Ervine often posed during Senate hearings on the Watergate scandal that lead to the resignation of President Nixon.

“I understand that you believed what you did was legal,” the Senator would ask, “but did you believe it was proper.” At the time, I remember querying a much-respected older friend and mentor, an attorney, about this. To my surprise his view was that there was, at least in the matters related to business and public policy, no distinction between what was legal and what was moral.

It seemed clear that the views of the Goldman Sachs Executives were similar. The adverse impact of their actions on clients might have given the executives their trust as well as their savings was not a matter of concern. A question comes to mind: In the domain of morality is there any real distinction between these executives and the much-maligned Bernard Madoff, except that the executives were far more clever?

The following is a May 31 excerpt from my “Insight from the Dalai Lama” calendar on the topic of greed.

When it comes to dealing with greed, one thing which is quite characteristic is that although it arises from the desire to obtain something, it is not satisfied by obtaining it. Therefore, it becomes limitless or boundless, and that leads to trouble. The interesting thing about greed is that although the underlying motive is to seek satisfaction… even after obtaining the object of one’s desire one is still not satisfied. On the other hand, of one has a strong sense of contentment, it doesn’t matter whether one obtains the object or not, either way, one is still content.

Just compensation?

Though a new year is beginning, I find that I cannot leave the old behind without venting briefly about two 2007 stories that I found particularly repugnant. My concern is the compensation packages recently awarded to “retiring” (read fired) Citibank Chief Executive Charles Price and Merrill Lynch Chief Executive Stanley O’Neil.

Stripping the verbiage from numerous stories in the business press, we learn that both men played key roles in implementing practices that have contributed to the current sub-prime mortgage debacle. This debacle is threatening the health of America’s economy and, perhaps even the global economy. Thousands of homeowners, by no means all of whom hold sub-prime mortgages have been stricken by spill-over consequences of actions by these financial leaders and others like them.

At least the firms they lead, too, are paying a price for entrusting positions of leadership to Price and O’Neil. Citibank, it is reported, will be writing down losses of $8 to $11 billion from subprime lending. Merrill Lynch losses are reported at $7.9 billion. Stockholders of the two companies are suffering additional losses.

But what about personal responsibility? It is reported that Price will receive compensation of about $27 million, plus $100 million in additional benefits from stock options. O'Neil's total package is reported to be $160 million.

I simply don’t get it. How can these men look themselves in the mirror each morning? How do they explain the morality of these circumstances to their children and grandchildren? Questions like this do not only originate with me. They also come from the students with whom I live at American University;.

It seems to me that the least Mr. Price and Mr. O’Neill could do is offer a heartfelt public apology to their former employees, stockholders and the American people. They could adopt a modest lifestyle, perhaps that of a police officer, military officer, social worker or junior high school teacher of a comparable age. They could donate the remainder of their ill gotten gains to some worthy cause.

That would be just compensation, it seems to me.