Being Principled During Crisis

 

 

 

The best organizations and leaders respond to a crisis by implementing emergency measures without straying far from their core principles and the foundation of their successes. Let's hope that the same philosophy is applied to the current financial crisis.

 

The $700 billion financial rescue package was a necessary emergency measure to help thaw frozen credit markets that had left businesses small and large deprived of capital needed to expand, invest, and hire.

 

The government, however, should not mistake its role as an emergency responder to that of a long-term significant participant in the financial markets. It should recognize that its foray into the financial markets must be temporary, lasting only long enough to stabilize the market and recoup what it paid for in the purchase of private assets. Even in tough times, we must never lose sight of the fact that a properly regulated free market--not government--is the best mechanism for spurring innovation, progress, and wealth.

 

The federal government should also exercise restraint when it revamps regulations governing U.S. financial markets. A crisis like the current one often draws impassioned, knee-jerk legislative and regulatory responses that later have to be undone or modified. Sarbanes-Oxley is one such example. Regulation of the financial markets should be guided by simple principles--transparency, responsibility, and accountability. It should also allow reasonable risk taking and the ability to innovate--two things that are essential to America's economic vitality.