With a new Administration in Washington, there is a mix of optimism and inquisitiveness on the part of corporate directors. They are optimistic that new ideas and a fresh start on tackling the country’s economic problems could begin to stabilize the banks and set the stage for a possible recovery later this year. The curiosity, of course, stems from the other R word: regulation. Corporate leaders are understandably concerned that in an attempt to reduce risk taking to prevent a future financial crisis, Congress will enact sweeping reforms and, by doing so, unintentionally restrict management’s abilities to fix real problems, adding new costs, compliance burdens, and distractions when we can least afford them.
As Harvey Pitt, former chairman of the SEC, puts it, “The next crisis isn’t going to be just like this crisis, because this crisis hasn’t been like any before it.” Very few people are arguing for the status quo and most agree, like Pitt, that we need to update some of the antiquated aspects of the regulatory system. Yet a knee-jerk reaction from Washington and a sprawling, one-size- fits-all regulatory response could just add to the problems Corporate America already faces.
In this month’s cover story, Assistant Editor Django Gold examines how government’s unprecedented ownership of equity and debt could bring a vast change to the role of regulators. In conversations with such corporate governance experts as Pitt, Martin Lipton, and Allan Meltzer, Gold finds that directors face what could be the biggest changes to the rules of the game in their lifetimes. What could avert that fate is a renewed spirit of responsibility and accountability on the part of boards to rein in abuses and set high standards of governance. In other words, a new beginning.
This issue marks a new beginning for Directorship, as well. We are now the official magazine of the National Association of Corporate Directors (NACD). Both organizations embraced this effort to ensure that directors continue to have the very best coverage, research, and events to help inform you and provide guidance from the top thinkers in corporate governance as this unprecedented time in the history of business continues to unfold.