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Much like Peter Finch’s last role in the 1976 film “Network”, the mad television news anchor Howard Beale, I’m mad as hell and I’m not going to take it anymore!

Recent months have delivered a horror show for the U.S. economy. Corporations, investment firms, and banks have all been dragged before the klieg-lights of inquiring minds asking the same litany of questions, but all boiling down to “How could this have happened?” It’s all very apparent and simple really; boards have stopped functioning as guardians of shareholders and have become the enablers of over-egoed management. Board members are supposed to be the adults in the room who are there to prevent government and regulatory authorities from getting anywhere close to being involved in the business of America.

We can all point to that moment in 2001 when Enron flew into the pages of financial news and corporate governance became part of the regular news-cycle, but does anybody outside of a parochial circle of governance professionals genuinely have an appreciation for just how important this subject really is? One would think that investment firms that manage the wealth for millions of Americans would be at the forefront of assessing corporate governance; John Bogle, the founder of Vanguard, has said that these firms should be the first line of defense due to their unique status as fiduciaries, but clearly they are just as equal to the title of enabler as “board member” has become.

This year we saw Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, Bank of America, Citigroup and the entire American auto-industry fall off the edge of a cliff due to failures in corporate governance and heard nary a peep from securities analysts, portfolio managers, mutual fund managers, asset managers, or anyone else from the investment management community about these failures sitting in all our funds and portfolios.

Now, I’m not a portfolio manager or a securities analyst in the industry. I do not hold an MBA degree or a CFA charter. I’m just a guy who’s curious. I like looking at things like board composition and the “demonstrated competence” thereof. Let’s take a walk down the composition of Citigroup’s board. I won’t use any names as it’s not my intent to embarrass people, but to point out just how under-equipped they are for the task at hand.

Citigroup’s board is jammed with people who do not possess any direct, hard, real, operational commercial banking experience. We have a finance and investment banker, a portfolio and hedge fund manager, a hospital manager, an aluminum executive, an oil executive, an MIT professor and former CIA director, an international bank executive, a chemical executive, an electronics executive, a media executive and lawyer, a lawyer for IBM, a non-profit president, another investment banker advisor, a medical device executive, and a consultant/lawyer for a non-profit. These are the folks who must meet and oversee the management of one of the most complex financial conglomerates in the known galaxy, but I can almost bet none of them worked as a bank-teller, much less a commercial lending officer. Can we see why Citi is a $3.00 stock now? Sadly, if I were do the same for Merrill Lynch, Bank of America, Fannie and Freddie and the auto industry the list would be very similar

However, when I look at a board like General Dynamics’, I see a much tighter alignment of qualifications. The board here has people that directly understand what the company produces, how the products are used, how they’re financed, and how the company must work closely with the U.S. government to manage product development. Here one can appreciate having a retired Air Force General and Admiral on the board, but I do not see the value add of having a retired Army General on the board of Bank of America. The mission of BofA’s board is not to fight our enemies, develop weapons systems or stroke the ego of its chairman who simply likes to have popular people around him.

As I said earlier, I’m not an investment professional overseeing other peoples money; I’m just a guy asking questions whose fed up with the “supposed” professionals who are treating lapses in governance with benign neglect. Why aren’t we seeing or reading about investment pros railing at the leadership of these companies? Where’s the outrage? I don’t see any anger expressed by these pros at the leadership of the companies they continue to shovel our hard earned dollars into.

Here’s what I want: I want to see bank boards have people on the board with banking skills, not diploma pedigrees. I want to see heavy industry boards with people who are not perfume executives, or leaders of the center for “pick-a-cause”. I’m mad as hell and I’m going to be watching all of you!
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