‘Inside Job’ revealed that professors take money to have opinions that please their private clients; it's time for that practice to end
An Open Letter To: Lee Bollinger, President, Columbia University
Dear President Bollinger,
Pleased as I am to be invited to speak at Columbia Business School in February, there’s something on my mind that we need to talk about before I show up, and that is Columbia Business School’s absence of an ethical disclosure policy.
What am I talking about?
Professors there advise private clients to the tune of hundreds of thousands of dollars in fees, advocating policies that serve the interests of those clients, and fail to disclose this to their students or the public – all while enjoying the prestige of a ‘neutral’ Ivy League perch.
This lack of disclosure came to my attention via the documentary, “Inside Job,” (shortlisted for the Oscar, by the way) in which director Charles Ferguson does an excellent job of explaining the origins of the financial crisis that overtook global banking in 2008 and 2009, and which was rooted in the deregulated culture of Wall Street.
Among the many revelations in this film is the corruption that has poisoned the departments of the nation’s top business schools and chief among them, Columbia’s.
Two Columbia professors come in for humiliation during their interviews with Ferguson.
Frederic Mishkin (pictured, right), a professor and former governor of the Federal Reserve, fails to have any response as to why he ignored evidence of the high-risk credit default swaps when he was on the Federal Reserve.
He similarly has no response as to why he cowrote a report praising the stability of the deregulated Icelandic financial system in 2006. Mishkin was paid $124,000 by Iceland to write this report. Iceland ‘s banking system collapsed within a year of Mishkin’s highly compromised analysis.
Glenn Hubbard (pictured, left), the business school dean comes in for a similar deer-in-the-headlights moment. Hubbard declines to disclose who his private clients are in the financial services industry. (His Wikipedia page states he is a board member of KKR and BlackRock.)
Another professor, this one at Harvard, is asked why this lack of disclosure does not constitute a conflict of interest. The poor man stammers until he finally abandons the attempt to answer at all.
The documentary convincingly argues that Hubbard bears responsibility for the financial crisis, given that he was an architect of the Bush-era laws that stripped the financial services industry of government oversight.
Both Mishkin and Hubbard fail to answer Ferguson’s direct questions involving conflicts of interest in their work. Indeed, they seem astonished that anyone would query them about it.
This is a matter of ethics in our academic institutions. Columbia University should not provide cover for individuals to line their pockets with fees while creating legitimacy for financial policies that ultimately serve their clients.
These professors should not be permitted to write papers advocating monetary or other policies without full disclosure – in those same papers – of who those clients are.
It is a larger question whether Columbia ought to welcome to its halls individuals who so thoroughly failed their duties as public officials. Particularly in the wake of a crisis as vast as the one whose effects we are still suffering, it behooves the university to scrutinize not only their character, but their record.
Until Columbia does something serious about this issue, it becomes itself part of the problem plaguing our economic system.
I look forward to your response, and to a clarification of Columbia’s policies,
Barnard College, Columbia University ‘85