Regional President Speech

; 5- 6-94 ; 5:22AM ; AMEX NEW YORK➔ Remarks by Richard F. Syron for Boston Un1vers1ty School of Management 1990 MBA Convocation Ceremony May 21, 1990 DEAN McGURN, DISTINGUISHED MEMBERS OF THE FACULTY, PARENTS, SPOUSES, AND I I ! ' OTHERS WHO HELPED SUPPORT THIS GRAND OCCASION (BOTH FINANCIALLY AND ! I EMOTIONALLY) -- AND MOST IMPORTANTLY, MEMBERS OF THE BOSTON UNIVERSITY SCHOOL ; I OF MANAGEMENT CLASS OF 1990. I i .,,,.,..... /j ' HAVE BEEN CH I I l V IDLY REMEMBER MY OWN COMMENCEMENT QUARTER OF A AY, ALMOST A CENTURY AGO. TO BE ASKED TO SPEAK AT ANY COLLEGE COMMENCEMENT IS A GREAT HONOR, BUT IT IS A PARTICULAR PLEASURE TO BE ASKED TO SPEAK AT BOSTON UNIVERSITY. MANY OF i MY FRIENDS HAVE DEGREES FROM HERE, AND MY WIFE IS A PRODUCT OF THE GRADUATE $CHOOL. AND ALTHOUGH I HAS AN UNDERGRADUATE AT A SCHOOL FARTHER UP ' COMMONWEALTH AVENUE, I HAVE A PARTICULAR AFFINITY FOR YOUR UNIVERSITY -- HITH i THEPRONOUNCED EXCEPTION OF YOUR TEAM IN RED AND HHITE THAT WEARS SKATES. AND ijHICH HAS CAUSED ME MUCH AGGRAVATION OVER THE YEARS, r ; 5- 6-94 ; e:22AM ; AMEX NEW YORK➔ -2- AS I WROTE THIS, I HAS STRUCK BY THE FACT THAT YOU ARE THE CLASS OF 1990, I AND THAT YOU TRULY HILL HAVE THE OPPORTUNITY TO SHAPE OUR NATION1S ECONOMIC I i LANDSCAPE AS WE ENTER THE NEXT MILLENIUM. WE ARE AT A PIVOTAL TIME IN OUR I i NI ATION'S -- AND THE WORLD'S -- DEVELOPMENT. THE RAPID CHANGES IN THE GLOBAL I ' ECONOMIC TOPOGRAPHY INDICATE THAT YOU WILL FACE A FAR DIFFERENT SET OF BUSINESS CHALLENGES THAN MY COLLEAGUES AND I HAVE FACED. BUT THAT IS ALL TO f i THE GOOD. EVERY CHALLENGE IMPLIES AN OPPORTUNITY, AND YOU CAN BE ASSURED OF A ! PLENITUDE OF BOTH. WITH THESE OPPORTUNITIES COME RESPONSIBILITIES, AND I WILL ! I I TURN TO THEM SHORTLY. i i IN LOOKING AT THE CONFIGURATION OF MANAGEMENT EDUCATION IN THE UNITED I I i STATES OVER THE PAST TWO DECADES. ONE CAN BE CRITICAL ABOUT MANY THINGS, I I HOWEVER, I FIND MYSELF IN A PARTICULARLY AWKWARD POSITION FOR AN IRISHMAN THIS ! i i AFTERNOON -- SINCE I AM IN ALMOST COMPLETE AGREEMENT WITH THE DIRECTION YOUR i I GRADUATE SCHOOL OF MANAGEMENT HAS TAKEN UNDER DEAN MCGURN'S DIRECTION. I ! ' AS YOUR SCHOOL ENTERS ITS SEVENTY-SIXTH YEAR, YOU SEEM HELL POISED TO PROVIDE THE MIX OF GRADUATES THAT THE REGION, THE NATION, AND INCREASINGLY THE i WORLDN,EED SO MUCH. I AM PARTICULARLY IMPRESSED WITH THE DIVERSITY YOU i I I i i I I I SENT BY:AMEX NEW YORK ; 5- 6-94 ; s:23AM ; AMEX NEW YORK➔ •t,•· •. ' 1·11•· . 1: ,nm . : ~ .:JI • • .:.I . .J .:.,, •., Cltf!- •• • ,:;,, I• ••• ·••••- · • • 1 ! -3- REPRESENYTO.U HAVE THE BENEFIT Of STUDENTS FROM OVER 60 NATIONS, AS WELL AS i A PREPONDERANCE OF STUDENTS WHO HAVE HAD VALUABLE WORK EXPERIENCE BEFORE l COMINTOG GRADUATE SCHOOL. YOUR ACHIEVEMENTS HERE, AND YOUR PROGRAMS OVERSEAS i ' INCLUDING THOSE IN BERLIN AND JAPAN, TRULY PLACE B.U. AHEAD OF THE POHER CURVE I IN MANAGEMENT EDUCATION. ; SINCE YOUR EXPERIENCE HERE HAS BROUGHT YOU INTO CONTACT WITH PEOPLE FROM i AROUND THE GLOBE AND ALL KINDS OF BACKGROUNDS, YOU HAVE SOME SENSE OF YOUR I i I PLACE IN THE HORLD COMMUNITY AND Of THE DIVERSITY OF THAT COMMUNITY. ALONG l ! WITH THIS AWARENESS SHOULD COME THE REALIZATION THAT ALL THE CULTURES AND ; NATIONS OF THE WORLD ARE HIGHLY INTERDEPENDENT FOR OUR MUTUAL PROSPERITY AND l . i LONG-RUN SUCCESS. i THE VERY CONCEPT OF 11SUCCESS11 IS SUBJECT TO A GREAT DEAL OF CULTURAL I i INTERPRETATION. THIS IS SOMETHING THAT WE AS AMERICANS ARE NOT AS AWARE OF AS I WESHOULD BE. DIFFERENT PEOPLE AND INDEED DIFFERENT SOCIETIES MEASURE SUCCESS i I DIFFERENTLY. WHAT IS SELF-SACRIFICE TO ONE PERSON MAY BE DISCIPLINE TO i A '' NOTHER; WHAT IS PERCEIVED BY ONE TO BE A LACK OF INDIVIDUALISM CAN BE SEEN AS ! A UNITY OF PURPOSE BY ANOTHER; WHAT SOME WILL DERIDE AS A LONG-RUN GAMBLE HILL I BE HAILED AS STRATEGIC VISION BY OTHERS. SENT BY:AMEX NEW YORK ; 5- 6-94 ; e:23AM ; AMEX NEW YORK➔ :# 5 ·,.- . ~· '· u . • a·t . . .. .u~I d .~ ~ l ·j •. i... . .t.· • • . ~ £ .': 't .. i' , . .. • ·-·· ....J .• i I I I -4- THESE DISPARATE POINTS OF VIEW VARY NOT ONLY ACROSS CULTURES AND ' SOCIETIESB,U T ALSO WITHIN SOCIETIES OVER TIME. IT HAS BECOME INCREASINGLY WORRISOME TO ME THAT OUR OWN AMERICAN SOCIETY ,IS LOSING MUCH OF ITS DISCIPLINE, ITS UNITY OF PURPOSE, ANO MOST OF ALL ITS I AWARENOEFS SIT S LONG-RUN GOALS. THIS HAS BEEN REFLECTED BY A WIDE VARIETY OF ' ,SOCIETAL SYMPTOMS -- CRIME, BOTH VIOLENT AND WHITE-COLLAR -- THE DRUG PROBLEM ! 't - ILLITERACY -- AND SOMETHING THAT IS BECOMING MORE AND MORE OF A PROBLEM, i rHE INABILITY OF GOVERNMENTS AT ALL LEVELS TO ACHIEVE A BALANCED BUDGET. MOST pF THESE PROBLEMS HAVE THE SAME ROOTS - OUR PREFERENCE FOR SHORT-TERM RETURN DR GRATIFICATION AT THE COST OF LONGER-RUN BENEFITS TO BOTH THE INDIVIDUAL AND rHE ECONOMY. HOWEVER, THESE ARE ALL PROBLEMS THAT YOU CAN DO SOMETHING ABOUT. DURING I JHE TIME YOU HAVE BEEN HERE, YOU HAVE ACQUIRED A TRULY MARVELOUS EDUCATION IN ' ! 1HE BROADEST PERSPECTIVE AS WELL AS SOME VERY VALUABLE TECHNICAL SKILLS. I KNOH THAT ALL OF YOU ARE AWARE THAT THESE SKILLS ARE ONLY A PART OF HHAT YOU CAME HERE TO LEARN, AND THAT THEY ARE TO BE USED AS TOOLS TO ACHIEVE BROAD I I SOCIAL PURPOSES. NOT ONLY PERSONAL ENRICHMENT. INCREASINGLY THE ACHIEVEMENTS i I . ., . -•, l..- ···-·- SENT BY:AMEX NEW YQRK ; 5- 6-94 i a:24AM ; AMEX NEW YORK➔ i# 6 lilllfr ·h i:.. ·! Lt· · -5- 1 ' Ij OF A BUSINESS LEADER ARE MEASURED BY THIS QUARTER'S EARNINGS. WHILE THIS MAY I jBE ONE BAROMETER OF SUCCESS, THE REAL MEASURE WILL BE WHETHER THAT MANAGER HAS I ;BEEN ABLE TO POSITION HIS OR HER COMPANY MORE STRATEGICALLY IN A HORLD OF j ! I . jEXPANDING MARKETS AND EVER-INCREASING INTERNATIONAL COMPETITION, AND IN A WAY ! ' I rHAT CONTRIBUTES MOST TO THE PUBLIC WELL-BEING. I I THIS BROADER PERSPECTIVE IS ESSENTIAL IF WE ARE TO DEVELOP A MORE F MPREHENSIVE WORLD VIEW, IF WE ARE TO UNDERSTAND OUR OHN PLACE AND AMERICA'S I PLACE IN THE COMMUNITY OF NATIONS, AND IF WE ARE TO DEVELOP A PLAN FOR THE I i FUTURE. THAT IS WHY I URGE YOU TO CONSIDER APPLYING YOUR SKILLS TO THE I ! I RESOLUTION OF THE MANY MONUMENTAL PROBLEMS FACING OUR NATION. i f THAT MEANS NOT ONLY THE POSSIBILITY OF BECOMING INVOLVED IN PUBLIC I SERVICE. BUT ALSO TAKING A CONTINUING INTEREST IN YOUR GOVERNMENT AND i I I I SOCIETY. IN THIS WAY YOU CAN MAKE SURE THAT GENERATIONS TO COME ARE OFFERED I ' i EVEN GREATER ECONOMIC AND EDUCATIONAL OPPORTUNITIES THAN HE HAVE ENJOYED. ! ' SINCE HE ARE GATHERED HERE TO RECOGNIZE YOUR ACHIEVEMENTS IN UNDERSTANDING iI I ~ND APPLYING THE TOOLS OF BUSINESS, FINANCE, AND ECONOMICS, IT SEEMS TO ME I I APPROPRIATE TO OFFER SOME BRIEF COMMENTS ABOUT THE CRITICAL NEED FOR THE ! & I APPi rrATTnN ns:- vni10 ~vT1 1 eo T•• 1e111rT1, .. .,..,. .., ...., ._. .......... --- -··- - ---· -· - APPLICATOIFO YNOU R SKILLS IN BUSINESS AND ECONOMICS TO THE PROBLEMS FACING& I I 1 IH E PUBLIC SECTOR. AMEX ;# 7 NEW.YQRK➔ -6- AS LONG AS HE AS A PEOPLE CONTINUE TO DEPRECATE GOVERNMENT SERVICE. I !INEVITABLY HE ARE GOING TO HAVE A DECLINE IN THE QUALITY AND THE EFFICIENCY OF i I . :OUR PUBLIC SERVICES -- A DECLINE HE CAN AFFORD LESS AND LESS, GIVEN THE I I :PANOPLY OF CHALLENGES FACING US AS A NATION. I I IT IS IMPORTANT TO NOTE THAT THIS IS NOT A PARTISAN OR NEH ·ISSUE. WHEN I i I i WAS IN THE TREASURY IN 1979 AND 1980 IN WASHINGTON, THE VIEH HAD ALREADY I . I ~MERGED THAT PUBLIC SERVICE WAS AT BEST A NECESSARY EVlL. AND AT WORST A 1 I ! i fARASITIC DRAIN ON SOCIETY. I I I THAT ATTITUDE, COMBINED HITH CONSTRAINING PAY CAPS AND THE RIGOROUS RULES kPPLIED TO PUBLIC SERVANTS, INEVITABLY HAS MADE IT MORE AND MORE DIFFICULT FOR i i TI HE PUBLIC SECTOR TO HOLD ONTO GOOD PEOPLE AND TO ATTRACT THE NEH SKILLS IT I ; i ~EEDS. i I THIS GROHING INABILITY TO ATTRACT GOOD PEOPLE HAS, AND HILL CONTINUE TO, ! I ~!MINISH HHAT HE CAN EXPECT FROM OUR PUBLIC SERVANTS. THE COST TO SOCIETY OF I l F.AILING TO ATTRACT HIGH-QUALITY PEOPLE WITH A LONG-RUN VISION OF THE FUTURE I IIRECTION OF THIS COUNTRY IS NOH PAINFULLY OBVIOUS TO us ALL. AS THE MAGNITUDE qF THE CRISIS IN THE SAVINGS AND LOAN INDUSTRY BECOMES MORE APPARENT, 1 i l l ; rt· .... SENT BY:AMEX NEW YORK ; 5- 6-94; 5:25AM; AMEX NEW YORK➔ ... . J : , l ' lli ' l l T; . ~ J ~ . • . , .. ' . I . .. {l ' b ~~ , .. . . . .. • . I ,\ I . •• ! • '.\ I I I -7- THIS CRISIS HAS NOT AN UNAVOIDABLE MISTAKE. WHILE SOME SAVINGS AND LOANS I iWOULD INEVITABLY HAVE FAILED, A SERIES OF MISGUIDED REGULATORY POLICIES AND ·I ! I jP OOR POLITICAL DECISIONS TURNED HHAT SHOULD HAVE BEEN A SMALL PROBLEM INTO A ! i CRISIS, WITH ENORMOUS RAMIFICATIONS FOR THE FINANCIAL MARKETS AND FOR OUR I iI UDGET DEFICI. AND INCREASINGLY, OUR ENTIRE NATIONT. i A QUICK REVIEW OF THE MISTAKES THAT CONTRIBUTED TO THE S&L CRISIS ~LLUSTRATES THE KIND OF PROBLEMS THAT DEVELOP WHEN POLICY IS POORLY DESIGNED ! ' i ~ND SACRIFICES THE LONG-RUN HELL-BEING OF THE ECONOMY FOR SHORT-RUN POLITICAL i ' ~ND FINANCIAL GAINS. ! I I THE SAVINGS AND LOAN INDUSTRY HAS CREATED INITIALLY TO PROVIDE FUNDS FOR I l ' tHE HOUSING INDUSTRY. S&LS DID THIS BY TAKING IN SHORT-TERM DEPOSITS AND ; I MAKING LONG-TERM MORTGAGE LOANS TO HOMEBUYERS. THIS WORKED REASONABLY HELL I I I UNTIL THE LATE SEVENTIES. HHEN INFLATION CAUGHT BOTH THE INDUSTRY ANO ~OVERNMENT REGULATORS BY SURPRISE. AS SHORT-TERM INTEREST RATES PAID ON ' DEPOSITS ROSE FAR ABOVE THE RATES CHARGED ON OLD MORTGAGES, INSTITUTIONS FACED I A DILEMMA. THE SEVERITY OF WHICH REQUIRES NO FORMAL TRAINING IN ECONOMICS TO I I ! • UNDERSTAND. I I 1 & I AMEX NEW SENT BY:AMEX NEW YORK i 5- 6-94 i 5:25AM i '' YORK➔ . .: um1 . m. . ..!cl.1 I 'i l:c: '.~2am1 . --·. .. . . . _. • , . . . . . ... '' I I I -8• I S&LS HAD LENT AT RATES BELOH HHAT THEY WERE PAYING FOR DEPOSITS. NOT :I SURPRISINGLY. BY THE EARLY EIGHTIES THE INDUSTRY WAS EXHIBITING LARGE LOSSES I I ~NO IMPAIRED CAPITAL. NOH, HOWEVER. THE EARLIER FAILURE OF REGULATORS, I I AND THE INDUSTRY TO CONSIDER THE RAMIFICATIONS OF INFLATION HAS LEGISLATORS, j \COMPOUNDED BY A SERIES OF POLICY DECISIONS THAT POSTPONED RATHER THAN RESOLVED i l THE PROBLEM. AGAIN. A PREFERENCE FOR A SHORT-RUN APPROACH. I INSTEAD OF CLOSING TROUBLED INSTITUTIONS, REGULATORS CHANGED THE WAY THEY I l I ' ~OED UP THE NUMBERS. USING 11NEW REGULATORY ACCOUNTING PRINCIPLES11 RAP • rcCOUNTING, LIKE RAP MUSIC. HAS SEDUCTIVE APPEAL. RAP ACCOUNTING ALLOWED AN l ~FFECTIVELY BANKRUPT INSTITUTION TO CONTINUE OPERATING. IN THE HOPE THAT JNTEREST RATES WOULD FALL AND SAVE IT. HHY DIDN'T LEGISLATORS AND REGULATORS I , ! I CORRECTLY IDENTIFY RAP AS THE REJECTED ACCOUNTING PRINCIPLES THAT THEY HERE? I I F;EH ELECTED OFFICIALS WANTED TO REQUIRE COSTLY CLOSINGS OF INSTITUTIONS, SOME I i I i QF HHICH MAY HAVE BEEN IMPORTANT CONSTITUENTS. NO REGULATOR WANTED TO TAINT HIS OWN INDUSTRY. THUS, A BANDAIO WAS USED TO COVER OVER A SEVERE GASH, HITH I I 1.HE INEVITABLE RESULTS THAT FOLLOWED. ! I & ; 5- 6-94 ; a:26AM ; AMEX NEW YORK➔ ;#10 . ' .g .. THE STORY GETS HORSE. IN SOME CASES. MANAGEMENT AND OWNERS. REALIZING THAT THEIR INSTITUTIONS EFFECTIVELY HAD NO VALUE, BEGAN TO MAKE LARGE CREDIT 1 I I I ,BETS. THIS HAS A PERFECTLY LOGICAL POSITION TO TAKE. IF THEY TOOK A LARGE ! 1 :BET AND HON, THEY NOH OWNED OR MANAGED A SURVIVING INSTITUTION. IF THEY TOOK I ~ BIG BET AND LOST, THE BILL ULTIMATELY WENT TO THE TAXPAYER THROUGH DEPOSIT ! i '.INSURANCE. AS A RESULT, HHEN INTEREST RATES DID FALL, AS INFLATION WAS BROUGHT UNDER CONTROL, MANY INSTITUTIONS HERE STILL DEEPLY UNDER WATER BECAUSE : OI F THEIR BAD CREDIT BETS. THE LONGER THE GOVERNMENT WAITED, THE LARGER THE : JETS, THE MORE COSTLY THE SOLUTION BECAME. HELL, AS THE SAYING GOES, PAY NOW OR PAY LATER. HE KNOW WHAT CHOICE HAS ~DE. WE HAVE ALL READ ABOUT THE GOVERNMENT OFFICIALS AND THE REGULATORS AND I I THE INDUSTRY -- ALL LOOKING OUT FOR THEIR OWN SHORT TERM INTERESTS, HE VE 1 i i . ALL READ ABOUT ELECTED OFFICIALS WHO CHOSE TO POSTPONE THE IRE OF CONSTITUENTS ' I I I i AND HIGHER GOVERNMENT DEFICITS. HE1VE ALL READ ABOUT AN INDUSTRY PLAGUED WITH I i UNSCRUPULOUS MANAGEMENT, AND REGULATORS WITH CLOSE TIES TO THE INDUSTRY THEY II . REGULATED. AND OF COURSE. WE'VE READ ABOUT THE BILLIONS OF DOLLARS IT WILL l l COST THE TAXPAYER. ' i & I r. SENT BY:AMEX NEW YORK i 5- 6-94 i e:26AM i AMEX NEW YORK➔ .. A',Ulllliii. ,. ., 1 ..:~lb. . .... . i I BUT WHAT HOULD WE HAVE READ ABOUT IF LONGER-TERM VIEWS HAD PREVAILED OVER SHORTER TERM INTERESTS? I SUSPECT WE WOULD HAVE READ THAT GOVERNMENT 1 I I PI FFICIALS WOULD HAVE MADE THE TOUGH DECISIONS, AND THAT THE TAXPAYER WOULD HAVE BITTEN THE BULLET EARLY ON. WE WOULD HAVE READ THAT OUR REGULATORY . ' ~GENCIES WERE BEING ADEQUATELY STAFFED, WITH CAPABLE PEOPLE HHO POSSESSED ! i i INTEGRITY, AND COMMITMENT. AND HE WOULD HAVE UNDERSTOOD THAT HE HOULD HAVE TO i I PAY TO HAVE OUR INTERESTS PROTECTED AND THAT IT HAS A WORTHWHILE INVESTMENT. ! ! i i FINALLY LOSING HOPELESS BANKRUPT THRIE l ~ PERED BY SHORT-: TERM HORIZONS. / ·, IN THE SHORT•RUN, MONEY HAS SAVED BY HAVING UNDERPAID AND OVERWORKED l ~EGULATORS, AND ELECTED OFFICIALS WERE ABLE TO POSTPONE THE IRE OF I ! ¢c,NSTITUENTS AND HIGHER GOVERNMENT DEFICITS. IN THE LONG RUN. HOWEVER, THE i l qosrs TO THE TAXPAYER INCREASED ENORMOUSLY. UNFORTUNATELY, IN THE BROADEST i I ~ENSE HE SEEM TO HAVE LEARNED LITTLE FROM THIS EXPENSIVE LESSON. HHILE THE i GOVERNMENT IS FINALLY CLOSING HOPELESSLY BANKRUPT THRIFTS, THE THRIFT RESCUE ! & i 1:I 1nnrna1,. .... "" n..-,, ... ,.. ......... •·-··- -------·- , ~ --..... ----· "' ■ ...... 1 wt I.... 1111'1 .. I I Rl.ta ....U G I PAGE 11-2 & PROGRAM AND OTHER GOVERNMENT PROGRAMS ARE STILL HAMPERED BY SHORT-TEAM I HbRIZONS. I I I i I SENT BY:AMEX NEW YORK ; 5- 6-94 ; e:27AM ; AMEX NEW YORK➔ . . a·t· . 1· \~ ... : .. fjJ· ,, . ··me, . ! -,.: •. .L ii~. !~ ,. . .. • . . . . 1, I j I HE ARE ALL AWARE OF THE TREMENDOUS SOCIAL PROBLEMS THAT AFFLICT OUR !COUNTRY. CONSIDER ONE OF THE MOST HORRIBLE -- DRUG ABUSE. ONE COULD ARGUE ! I ;THAT IT IS THE HARSHEST SYMPTOM OF OUR SOCIETY'S PREFERENCE FOR IMMEDIATE I GRATIFICATION OVER A LONGER-TERM HORIZON. HOHEVER, HOH CAN HE IN THE BUSINESS WORLD EXPECT TO HAVE ANY CREDIBILITY I I !N HELPING SOCIETY DEAL WITH THESE ISSUES, WHEN THE SAME BASIC LACK OF I I LONGER-TERM DISCIPLINE PERVADES THE FINANCIAL WORLD? A GOOD EXAMPLE IS THE I I ~EPLACEMENT OF EQUITY BY THE EXPLOSIVE GROWTH OF DEBT, LEADING TO AN EVER MORE I l LEVERAGED ANO VULNERABLE AMERICA. UNFORTUNATELY, THIS PHENOMENON IS NOT CONFINED TO JUST THE CORPORATE $ECTOR. GOVERNMENTS AT ALL LEVELS, AS HELL AS HOUSEHOLDS, FIND THEMSELVES I ~ITH DEijT BURDENS THAT CONSUME AN INCREASING SHARE OF CURRENT INCOME. IN MANY M.IAYS, OUR ENTIRE SOCIETY HAS BEEN ENJOYING AN ORGIASTIC BATH IN A JACUZZI OF DEBT, WITH LITTLE THOUGHT OF WHAT HAPPENS WHEN WE GET OUT OF THE TUB. AMEX NEW :#13 YORK➔ -12- THE 1980S HAVE SEEN AN UNFORTUNATE SHIFT IN ATTENTION AHAY FROM THE i \CREATION OF NEW FIRMS AND TECHNOLOGY THAT WOULD ULTIMATELY INCREASE EMPLOYMENT I i \AND REAL WEALTH, TOWARD A FASCINATION HITH CARVING UP HHAT ALREADY EXISTS, IN :A WAY THAT PROVIDES AT LEAST SHORT-RUN FINANCIAL GAINS. WHAT I AM TALKING I I fBOUT, OF COURSE. IS THE PHENOMENON OF LEVERAGED BUYOUTS AND JUNK BOND ~AKEOVER FINANCING, I I TRANSCENDING ALL OF THIS IS THE PERVERSE INCENTIVE CREATED IN OUR ECONOMY ! i I WHEN THOSE HHO CARVE UP WEALTH ARE COMPENSATED MUCH MORE HIGHLY THAN THOSE HHO I . ! ! CREATE IT. THE AMERICAN PUBLIC IS MORE THAN FED UP WITH STORIES OF HOH YOUNG i ' i FINANCIERS HAVE BECOME MILLIONAIRES -- AND IN SOME CELEBRATED CASES, EVEN I ! BILLIONAIRES -- IN A RELATIVELY SHORT PERIOD OF TIME, IN THE PUBLIC'S VIEH I $IMPLY BY TRADING PIECES OF PAPER. ONE DOESN'T HAVE TO BE AN ECONOMIST OR ! l ~' INANCIER TO REALIZE THIS; RATHER, ONE CAN SIMPLY READ THE POPULAR PRESS AND ! i BI OOKS LIKE BONFIRE OF THE VANITIES, LIAR'S POKER, OR BARBARIANS AT THE GAJE, \ THE s•L CRISIS AND THE MERGER BOOM ARE ONLY TWO EXAMPLES FR014 THE 1980S OF I ~YS THA.T SOCIETY HAS BEEN HINDERED BY INADEQUATE AWARENESS OF LONG-RUN i I ! G,OALS. YOUR GENERATION WILL NEED TO APPLY THE WONDERFUL EDUCATION YOU HAVE l ;' ~ECEIVED TO A HOST OF PROBLEMS THAT CRY OUT FOR GOOD LONG-RUN ANALYSIS, I i I ;.,-' SENT BY:AMEX NEW YORK ; 5- 6-94 ; a:27AM ; AMEX NEW YORK➔ ··1lt~1J:. f .. --Jll'llilm.'l l\ ... ..:4 I - ....., .,~":>■n~r . ,.... . . ·· -·· . . . . . ' C • --13- HHlLE MANY OF OUR BRIGHTEST GRADUATES HAVE BEEN ATTRACTED BY THE LARGE I ;SALARIES ON HALL STREET. FINANCIAL REGULATORS HANDICAPPED BY BUDGET CUTS HAVE ' :NOT BEEN SO FORTUNATE. YET, THE NEXT DECADE HILL BE THE MOST IMPORTANT PERIOD I ! rF REGULATORY CHAN~E SINCE THE DEPRESSION, MAJOR CHANGES IN DEPOSIT ~NSURANCE, COMPETITION BETWEEN INVESTMENT AND COMMERCIAL BANKS, AND THE GREAT INTERNATIONALIZATION OF FINANCIAL MARKETS HILL REQUIRE THE ATTENTION OF THIS l I I NATION'S MOST CREATIVE MINDS. IF HE ARE TO CONTINUE TO HAVE DYNAMIC AND : INNOVATIVE FINANCIAL MARKETS WITHOUT SUBSTANTIAL INCREASES IN FINANCIAL I i fRAGILITY AND RISK. THE PAST SEVERAL YEARS HAVE SEEN INCREASED AWARENESS AND REAL CONCERN ~BOUT THE FEDERAL BUDGET DEFICIT. YOUR GENERATION HILL BE SADDLED NOT ONLY WITH MUCH OF THE BILL FOR THE DEFICIT. BUT ALSO WITH THE COST OF THE GOVERNMENT SPENDING THAT DID NOT OCCURR. AMERICA'S INFRASTRUCTURE HAS BEEN I i I ~EVERELY DAMAGED BY THE BUDGET CRISIS. HHILE THE POPULATION HAS GROHN. THE I f: I ~CADS, BRIDGES, AIRPORTS, AND TRAINS HAVE NOT BEEN EXPANDED OR EVEN REPAIRED; l I I rJOR GRIDLOCKS OC:OJR IN OUR BIG CITIES. I :· , SENT BY:AMEX NEW YORK ; 5- ~-94 ; e:2BAM ; AMEX NEW YORK➔ :#15 i;~:JUiJIIIU~ .. '. ..:1. _;.:__ .• 1 ::Ji'..,: I -14-- I PERHAPS THE BIGGEST FAILURE IS OUR LIMITED REGARD FOR THIS COUNTRY S MOST 1 I i YALUABLE RESOURCE, OUR HUMAN CAPITAL. AS BUDGET CUTS CAUSE EDUCATION CUTBACKS I FROM OUR LOCAL ELEMENTARY SCHOOLS TO OUR LARGEST UNIVERSITIES, WE ENDANGER OUR . ! i COMPETITIVE EDGE, OUR SKILLED LABOR FORCE, SHORT-RUN BUDGETS MAY BE IMPROVED ! I av ALLOWING OUR CAPITAL STRUCTURE TO DETERIORATE, BUT THE LONG-RUN EFFECTS I NILL BE FELT BY YOU. I I YOUR GENERATION WILL ALSO BE ASKED TO ACHIEVE MUCH CLOSER INTEGRATION WITH l THE REST OF THE HORLD. FROM INTERNATIONAL TRADE TO ENVIRONMENTAL POLICIES, I ,LL OUR MAJOR EFFORTS HILL REQUIRE GREATER INTERNATIONAL COOPERATION. I ~HORT-RUN SOLUTIONS, SUCH AS PROTECTIONISM IN INTERNATIONAL TRADE OR IGNORING OUR DISPROPORTIONATE SHARE OF POLLUTION AND WASTE, HILL HAVE LONG-RUN EFFECTS BOTH HERE AND ABROAD. ALL THESE PROBLEMS WILL REQUIRE THOROUGH ANALYSIS BY PEOPLE WITH THE 1ECHNICAL SKILLS THAT YOU HAVE ACQUIRED HERE AT B.U. I HOPE THAT MANY OF YOU ' ~ILL APPLY YOUR SKILLS DIRECTLY TO THE PROBLEMS FACING YOUR GENERATION. I l. ~INDING SOWTIONS NOT ONLY HILL IMPROVE SOCIETY, BUT ALSO WILL BE PERSONALLY '· ~NRICHING. SENT BY:AMEX NEW YORK ; 5- B-94 ; e:2eAM ; AMEX NEW YORK➔ L-,Ir ........ .. .. .. ._:JH.~ut,s',.'. .;.., "'" ·.. . ,i,IIL; -t ... ~-.~~I- -·15- MANY OF THESE PROBLEMS MUST BE CONFRONTED IN THE PUBLIC SECTOR, AND I HOPE ~HAT MANY OF YOU HILL CONSIDER PUBLIC SECTOR EMPLOYMENT AS YOU BEGIN TO HAKE l t:AREER CHOICES. IN THAT REGARD, I NOTE THE GREAT PROMISE OF YOUR MBAs HITH I ~NCENTRATIONS IN PUBLIC ADMINISTRATION AND HEALTH ADMINISTRATION, SECTORS ' TI HAT COMMAND AN INCREASING SHARE OF GNP. FOR THOSE OF YOU HHOSE MAJOR j I CONTACTS WITH THE GOVERNMENT WILL BE YOUR APRIL 15 DEADLINE FOR TAXES, I HOPE I i ! fIH AT YOU HILL REMEMBER THAT THE COSTS OF GOOD GOVERNMENT PALE, RELATIVE TO THE i COSTS OF MISTAKES MADE BY BAD GOVERNMENT. ! REGARDLESS OF YOUR CAREER PATH, TRY TO AVOID THE EASY, THE SHORT-RUN i ~ECISIONS, HHETHER YOU HORK IN THE PUBLIC OR THE PRIVATE SECTOR, YOUR I l I l EMPLOYER HILL VALUE ANYONE HHO CAN CAREFULLY ANALYZE A PROBLEM HHILE KEEPING I ' I THE LONG-RUN PERSPECTIVE IN VIEW. THIS CAN BE MORE DIFFICULT TO DO THAN MANY l l ! QF YOU MAY REALIZE AT THIS POINT IN YOUR CAREER. OUR SOCIETY LIONIZES THOSE I HHO MAKE SHORT-TERM GAINS. FROM THE TAKEOVER ARTISTS ON HALL STREET TO OUR i I l MOST ACCOMPLISHED ATHLETES, WHAT THEY MAKE, RATHER THAN HHAT THEY HAVE DONE, F\REQUENTLY DOMINATES THE HEADLINES. i I I.. ; 5- 6-94.; a:2eAM ; AMEX NEW :#17 YORK➔ -16- MANY OF THESE PERCEIVED HEROES ARE NO DIFFERENT FROM MEGABUCKS HINNERS; 1HEY PLACED THEIR BETS AND THEY REAPED HUGE REWARDS. TOO LITTLE ATTENTION IS I PiLACED ON THOSE WHO ARE IN THE GAME TO STAY, THE TRUE HEROES SHOULD NOT BE I THOSE WHO HAPPEN TO HIN THE BET. BUT THOSE WHO CAN STEP BACK AND TAKE A l I I liONGER-TERM PERSPECTIVE. THEIR REWARDS MAY BE YEARS AWAY AND HAVE LITTLE TO 1 I DO WITH THEIR REMUNERATION, BUT THE BENEFITS TO THEMSELVES AND PERSONAL S,OCIETY WILL LAST THE LONGEST. I HOPE MANY OF YOU HILL BE AMONG THEM. I

Richard F. Syron (1990, May 20). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19900521_richard_f_syron

@misc{wtfs_regional_speeche_19900521_richard_f_syron,
  author = {Richard F. Syron},
  title = {Regional President Speech},
  year = {1990},
  month = {May},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19900521_richard_f_syron},
  note = {Retrieved via When the Fed Speaks corpus}
}