Is political leadership over as we know it?

Let's start at the top on the $700 billion financial bailout or whatever you want to call it:

President Bush. Done. End of story.

Treasury Secretary Henry "Hank" Paulson. A bit better but suffering from an incurable disease: Perceived ties to investors on the street formerly known as Wall, which has destroyed the public interest and pitted small business against big business in ways that haven't been seen since the Great Depression. Ok, sorry for that last phrase. We had to work the cliche in somehow. Paulson, an appointee not an elected official, isn't helping his cause by laying blame on foreclosures and then saying things like "we're doing this for the American taxpayer." That just doesn't wash.

Fed Chairman Ben Bernanke? While understandably difficult to follow Alan Greenspan, the original architect of sub-prime mania, Bernanke looks like he's on the verge of a nervous breakdown every time he visits Capitol Hill. Fully understandable -- just not what anyone wants to see from the guy in charge of cash flow.

Congress? Members of the House and Senate are notorious for appearing to stand up for the folks while the cameras are rolling -- only to cave in later out of fear. That's what feels like is happening now. In political terms, a vote for the bailout may put the 2002 Iraq war vote to shame. We're holding out hope that the counter balance to the conventional wisdom -- do this now or else -- will produce a better outcome.

Where are the nation's "best and brightest" CEOs? Oh, that's right. Hiding away counting up their cash while dialing their hedge fund and private equity buds to see where the next deal may lie. Others are polishing up their resumes with turnover season now in full swing.

The exception always seems to be Warren Buffett who has invested $5 billion into Goldman Sachs. It shouldn't always take a brand name such as Buffett to step up. But thank God he does.

The two presidential candidates? Not even in the park. Both are holding back, making political calculations about what to say and do instead of standing up right now and declaring what they think should be done in definitive terms. If anyone thinks Barack Obama and John McCain are capable leaders in the mold of Teddy Roosevelt, then we have some free beachfront property that's not foreclosed. It's not entirely their fault -- more about this inane way we go about electing the leader of the free world.

Yes, leaders and students of leadership, we are now entering uncharted territory.

No one has shown capability to lead the country right now. Out of fairness to the current slate, maybe a better question is: Can the country even be led in its current state?

If nothing else, the bailout issue gives new meaning to the saying: All politics are local. Former titans (and friends) such as Tip O'Neil and Ronald Reagan may need to be raised from the dead at the current rate.

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Fear is not an option

Perusing today's news is enough to make any reasonably minded business person gag.

Two New York Times pieces, in particular, about how media are tempering what they say http://www.nytimes.com/2008/09/22/business/media/22press.html?ref=business and how advertisers are trying to decide whether to ramp up advertising http://www.nytimes.com/2008/09/22/business/media/22adcol.html?ref=business in the wake of last week's, uh, negative turn of events.

No wonder the public has tuned out media and no longer trusts government. Both institutions continue to fail on providing clear cut solutions -- much less well thought out ways to even find a solution.

Message to business leaders: Don't rush to judgment. Remove obstacles where you can. Take the appropriate actions to protect and help key constituencies in your business. That means serving customer need, being clear and up front to employees and investors and aligning strategy and execution with the appropriate systems, capabilities and people.

This message may not be sexy enough for public consumption, but it's what matters. Difficult times require steady hands, not a bunch of flailing motions that simply reinforce existing anxiety.

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Clarification

Evidently, some readers thought Tuesday's "Where was the Lehman board?" post was a copycat of a much better rendition that was originally posted Monday on the Wall Street Journal's Deals blog.

Go to http://blogs.wsj.com/deals/2008/09/15/where-was-lehmans-board if you would like to review a copy. You also can read the same exact copy that appeared online Monday in today's print edition. Odd repetition but part and parcel of this brave new world.

It was never our intention to steal someone else's idea. Or in this case, a professional journalist at a reputable publication who we like to read when there's time. Chalk up the oversight to not reviewing as many web blogs as possible. "The Garlington Report" is not our full-time job either. But that's beside the point.

To avoid future oversights, we will leave the Wall Street meltdown to the legions of reporters currently on the case. They're the pros. We're just an niche observer who likes to underscore points relevant to our audience.

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Where was the Lehman board?

What do a theatrical producer, retired Rear Admiral and the long ago retired CEO of IBM have in common? It's not a trick question. But you might mistake the answer for the punch line of a bad joke.

The answer is they're all now former members of the Lehman Brothers board of directors.

The entire cast counts four retired hands, two private investor/advisory types and one self named independent investment consultant who serves as the Chairman of the Finance and Risk Committee. Ok, the latter is well known name and respected investor, Henry Kaufman. But still. Where was Mr. Kaufman on the risk that obviously did this firm in? Does anyone know?

Taken together, the list (http://www.lehman.com/who/bios/board_directors.htm) looks more like the casting call for the movie, Cocoon, than a robust slate of active directors looking out for shareholder interest. Fuld is a dead man walking so we'll give him a pass on governance.

As to the others, well, good luck with getting new directorships. You probably won't have any problem, seeing that the old boys network likes to recycle the same old bodies into the same old chairs. It's a mystery that remains unsolved for now. But the day of directorship reckoning is coming. Keep screwing up at this level, and the secret is bound to get out.

We remain completely mystified that nothing seems to have been learned or applied since the collapse of Enron.

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Memo to Ken Lewis

"Overnight, the shotgun merger will transform Bank of America into the nation’s largest player in wealth management." -- New York Times, September 15, 2008

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," Mr. Lewis said in a statement. "Together, our companies are more valuable because of the synergies in our businesses." -- Wall Street Journal, September 15, 2008

Asked by an analyst if he had a desire to pursue a deal with Bear Stearns, Mr. Lewis shot back: “I’ve had all the fun I can stand in investment banking.” -- Wire services, September 2007.

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To: Ken Lewis
From: Jeremy Garlington

While you're soaking up status as Wall Street's newest darling, we thought we would offer up a sobering reminder that seems lost every time a big deal comes calling.

More than half of all mergers and acquisitions fail (percentage higher -- verify with consulting and strategy advisory firms who publish endlessly on this subject) due to what's commonly known as culture clash.

We highly recommend you throw out the scripts and platitudes about "synergies and scale." It's time to get real. Here's a primer:

*For all those valuable existing wealth managers under the U.S. Trust umbrella that you purchased from Charles Schwab, what does the absorption of Merrill Lynch's wealth management unit mean to them? What can they expect to gain or lose?

*Will the collective businesses under the Bank of America be compensated in identical fashion? Or will there be different scales for different folks? More specifically, will a loan officer in Crawford, Texas (not named Bush) be incentivized to do his job the same way a wealth manager gets paid in Cleveland?

*How do the assets and liabilities of Countrywide and Merrill Lynch intersect? Are there economies of scale or redundant debt vehicles that need to be written down? Better yet, is there a vehicle that you can ride between them before they go at each other's throats?

*Who is going to lead the combined operations of the combined entities? You? Someone new? Better yet, who is qualified to do so? A bunch of retail bankers who previously lost their shirts in investment banking, or new whiz kid managers and leaders from other industries?

Good luck with getting to the bottom of these questions, the key to being in the ballpark of successful integration. This challenge obviously will require all the collective ability you can muster. We will be watching closely for an outcome that demonstrates reality-based leadership.

Oh, and one last thing: Are you sure your board, or is your board sure, that this deal is in the best long-term interests of shareholders? Paying 70 percent above market value begs an answer.

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Life after Linked In?

Here's a link to a conference we're taking part in this week: http://www.onrec.com/conferences/090908/schedule.html

Our session, scheduled as the conference's final panel discussion, is titled, "Recruiting and Social Media...Interactive dialogue with the experts." This probably should be re-named, "The Business of Social Media: What's Worked vs. What Hasn't and Why." But we digress.

The only real clear takeaway is the widespread use of Linked In, the networking tool that a majority of business people over 30 and under 50 now use.

If Linked In represents social media's first generation, then blogs and micro blogs, such as Twitter, represent the second generation. Of course, that assumes blogs don't blow up based on the backlash being created in the presidential race and micro blogs such as Twitter don't find the dot.com ditch.

It's still not clear yet who will shape a third or next generation. Here's hoping other panelists and audience members can offer up an answer.

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